Zcash price could be on the verge of a major crash after confirming a very bearish pattern just days after surging nearly 850% from its October low.
Summary
- The Zcash price has fallen 30% since hitting a seven-year high of $734.96 last weekend.
- Open interest on Zcash futures has fallen 28% in the past 24 hours.
- The price action confirmed a bearish double-top pattern on the 4-hour chart.
According to data from crypto.news, the price of Zcash (ZEC) increased by more than 850%, from $76 on October 1 to $734.96 on November 8, the highest level in the past 7 years. The privacy coin has since fallen 30% and was trading at $512 at the time of writing.
Zcash’s price rise in recent months was driven by multiple catalysts, including rising investor demand for privacy-focused cryptocurrencies, amid rising concerns about surveillance and increasing regulatory pressure on transparent blockchains like Bitcoin. Industry peers such as Monero (XMR), Railgun (RAIL) and Dash (DASH) also benefited from this demand, rising 24%, 31% and 49% respectively.
The recent gains are also supported by strengthening fundamentals within the Zcash network. Zcash data dashboard show that 30% of the total ZEC supply, or approximately 4.83 million tokens, is now stored in ring-fenced pools, an increase of almost 60% from the past month. These shielded pools rely on zk-SNARK cryptography to enable completely private transactions.
However, at the time of writing, market sentiment around Zcash appears to be bearish, as evidenced by a notable decline in futures activity. Facts from CoinGlass show that open interest on ZEC futures has fallen 28% in the past 24 hours and was hovering around $846 million at the time of writing. Falling open interest indicates that traders are closing their positions and may indicate a lack of conviction in ZEC’s current price trend.
Additional data shows that the long-short ratio has fallen below 1, indicating that a growing number of traders now appear to be betting on a future price decline rather than profits. This could fuel bearish sentiment within the Zcash community and put additional pressure on the token’s price in the coming days.
On the 4-hour chart, Zcash price has confirmed a breakdown of a double top pattern, which tends to indicate an upcoming decline in technical analysis.
The pattern neckline retails at $503.42, while the two tops retail for $749 and $683 respectively.
The momentum indicators are also showing bearish signs, arguing for further downtrend. The MACD lines are pointing downwards with a widening gap as the bears gain a stronger hold on the market. Meanwhile, the RSI is also trending lower and still has room to fall before reaching oversold territory.
As such, Zcash price could decline towards the psychological support level at $400, which also aligns with the 50% Fibonacci retracement level on the chart.
A decisive break below could trigger a drop towards $256.41, a target derived by subtracting the height of the double top pattern from the pattern neckline price market. At the time of writing, this level is approximately 50% below the current price.
On the other hand, a recovery above the psychological resistance area at $600 would negate the bearish setup and signal a potential recovery.
Disclosure: This article does not represent investment advice. The content and materials on this page are for educational purposes only.
