Why is Zcash's ZEC Experiencing a Surge Right Now?

Why is Zcash's ZEC Experiencing a Surge Right Now?

Key Takeaways:

ZEC’s October surge of 500% is driven by endorsements from celebrities and forced short liquidations.
Current market patterns suggest a possible 30% correction towards the $260–$270 support level in November.

Zcash, a cryptocurrency with a strong focus on privacy, experienced a significant rally, soaring 7.75% to around $390.75—marking its highest price since 2018. In contrast, the overall crypto market saw a decline of 2.50% during the same time frame.

ZEC/USD vs. TOTAL crypto market cap daily chart. Source: TradingView

ZEC's price has surged nearly 500% in October, while the overall cryptocurrency market experienced a decrease of 4.50%. So, what is driving Zcash's remarkable comeback?

High-Profile Endorsements Boost ZEC Price

Celebrity endorsements have significantly contributed to ZEC's upward trajectory.

The price of Zcash began climbing after well-known investor Naval Ravikant referred to it as an "insurance against Bitcoin" in a post on October 1. Following this, the price jumped over 60% in a single day and has maintained its upward momentum.

In a notable mention, Mert Mumtaz, co-founder and CEO of Helius—which is focused on Solana development—suggested a price target of $1,000 for Zcash, drawing more attention to it and encouraging traders to capitalize on the momentum.

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Recently, Arthur Hayes, the co-founder of BitMEX, further energized the ZEC rally by announcing a $10,000 target, resulting in a 30% increase in ZEC's price.

This phenomenon echoes similar situations seen with Dogecoin, where celebrity endorsements played an essential role in driving investor interest.

Short Liquidations Propel the Rally

Short liquidations have also played a crucial role in Zcash’s price increase.

Over the past two weeks, ZEC futures have witnessed nearly $65 million in total liquidations, with more than half attributed to short positions, according to estimates from CoinGlass.

Zcash total liquidation chart. Source: CoinGlass

This trend indicates that ZEC’s rise has been fueled by a classic short squeeze, where traders betting against Zcash were compelled to close their positions as prices increased. Coupled with this, retail investor enthusiasm has surged, as seen by spikes in Google searches for "Zcash" throughout October, particularly on days when substantial price increases occurred.

Zcash 30-day internet search trend. Source: Google Trends

The combination of liquidations-driven buying and persistent retail investor interest has helped sustain the rally beyond its initial triggers.

Technical Indicators Point to a Possible Correction

The daily chart reveals that ZEC is forming a rising wedge pattern, often indicative of potential price corrections following extended upward trends.

Currently, the upper edge of this wedge is near $450, suggesting that ZEC may have room to rise toward this level before momentum begins to slow.

ZEC/USD daily price chart. Source: TradingView

However, a bearish divergence is noted between ZEC's rising price and declining relative strength index (RSI) readings, which are currently around 74. This, combined with decreasing trading volumes, indicates that the pressure from buyers might be decreasing.

If sellers manage to push ZEC below the lower trendline of the wedge, it could confirm a potential drop of 30% towards the $260–$270 range in November. This area aligns with the 20-day exponential moving average (20-day EMA), illustrated by the green line on the chart.