I think this article from Chabad.org might be able to answer your question:
The Hebrew word for Zion, Tzion (ציון), can be translated as “indication” or “marking.”
The Lubavitcher Rebbe, Rabbi Menachem Mendel Schneerson, of righteous memory, explains that the Jewish people are called Tzion by virtue of their study of Jewish texts and fulfillment of G‑d’s commandments. This causes them to be distinguished, or marked, for their uniqueness. As it states in Jewish law, “When a physical object has a sign, a marking, should it be lost, the sign enables it to be returned to its owners.”
So too, the Jewish nation has its marking; thus they are not lost among the rest of the world, and always return to their Owner.
Because Tzion describes Bnei Yisrael as being marked and unique among the rest of the world, it would make sense that our holiness city is named after one of our nation's holiest attributes.