Key Takeaways

Profit-taking by top traders and structural challenges may be fueling negative sentiment around Zcash.
If momentum maintains or if ZEC successfully retests lower consolidation levels, it could revisit its highs from 2017.
Zcash (ZEC) recently saw a resurgence in 2021, reaching highs around $400; however, that momentum appears to be slowing as the altcoin enters a distribution phase.
While ZEC remains a hot topic in crypto circles, on-chain data is indicating signs of weakness.

Understanding Zcash's Current Distribution Phase

Recent data from CryptoQuant shows that Zcash is transitioning into a distribution phase. This is illustrated in the Spot Volume Bubble Map, which indicates overheating. The metric has maintained a neutral stance since ZEC was trading below $100.

Although this metric doesn’t guarantee future price movements, it hints at the potential for price weakness. Typically, prices tend to pull back or consolidate when they approach previous highs.

ZEC

Source: CryptoQuant

This bearish sentiment is largely driven by capital transfers and profit-taking, with capital flowing from larger investors (whales) to smaller ones (retail investors).

Rising Take-Profit Activity—Understanding the Shift

Additional analysis reveals that leading traders are liquidating their positions. Notably, CryptoQuant's founder, Kate The Alt, mentioned on X (formerly Twitter) that she had begun selling her Zcash holdings, stating, "Started selling my zcash bags. Sorry but you’re retail if you’re buying zcash now."

This observation aligns with increased retail activity, especially when ZEC prices reach seasonal highs. It suggests a need for caution among new traders looking to enter ZEC at this time.

Despite this, confidence remains in ZEC’s price potential as institutional investors continue to hold their positions. Data from CoinGlass shows that Grayscale Zcash Trust still holds nearly 400K ZEC, valued around $132.5 million at the time of writing.

Zcash Trust

Source: CoinGlass

Given these dynamics, there is a possibility that ZEC’s price may fluctuate as bulls and bears battle for control.

Could ZEC’s Price Reach 2017 Highs Again?

In chart analysis, ZEC achieved its highest value in 2021, yielding returns of over 5x within a month after breaking through a consolidation pattern dating back to mid-2022.

If ZEC manages to maintain prices above $372, it could target its 2017 peaks, potentially reaching between $750 to $900, surpassing AMBCrypto’s previous forecast of a 100% surge.

On the flip side, ZEC could see a drop to retest levels around $260 or lower. A breakdown below the 200 EMA would signal the end of the current bullish trend.

Zcash Price Chart

Source: TradingView

Currently, ZEC is reflecting a bearish sentiment which points to a period of uncertainty. Nevertheless, the bullish structure remains intact; a break above $372 would confirm ongoing strength in ZEC’s price.