The price of Zcash has taken a big hit in recent days. Despite positive news, such as the new ETF application and growing interest from companies, the price continues to fall sharply. For many investors, this feels contradictory: how can a coin with so much positive attention sink so deep?
Technical signals are turning red, traders are exiting, and volatility is increasing. For these reasons, this might not be just a correction but a potential trend reversal.
Zcash Price Breaks Key Support #
Zcash is currently trading around $470 after an 8% drop in one day. In just a week, more than 28% of its value has been wiped out, while analysts on social media warn of further losses.
Analyst EarlyAdopterz tweeted that the price has broken below an important trend line, which is very bearish. He noted a Fibonacci retracement support at $477.54, warning that if it breaks, Zcash could head back to the $200 level. However, he added that a quick recovery could prevent this scenario.
The numbers confirm this picture. CryptoBlockParty reported that $16 million worth of long positions were liquidated in one hour. This happens when investors using leverage take too much risk and the price moves in the opposite direction.
Additionally, the open interest, which shows how many futures contracts are still open, has fallen below $1 billion again. According to the analyst, this means large investors are closing their positions and the market is likely not done falling.
Interestingly, this decline comes at a time of positive news. Grayscale has taken another formal step to convert its Zcash Trust into the first U.S. Zcash fund.
From Explosive Rise to Hard Correction #
The contrast with a while ago is enormous. While many cryptocurrencies were in a downtrend, privacy coins like Zcash and Monero were the standouts. Zcash rose nearly 13% in one day to $568. Over the past months, the coin even rose by almost a thousand percent.
But that extreme rise also led to Zcash becoming overheated. The relative strength index (RSI) shot above 80, a sign that the price rose too quickly.
Still, Zcash has opportunities. If the coin manages to recover towards the $550 to $600 range, there will again be room for recovery. But if the price falls below $450, the decline could accelerate further. Therefore, the coming days will be crucial.