Zcash's Price Surge: Will It Face a Sudden Decline?

Zcash may see ‘violent end’ as ZEC price rallies 1500% in just two months

Summary:
Zcash (ZEC) has experienced an impressive price increase of 1500% over the last two months. However, many analysts are warning of a potential correction. Despite indicators showing ZEC is overbought, there are predictions of further gains, possibly pushing prices toward the $900–$1,000 mark if current trends continue.

Key Takeaways:

ZEC is currently identified as extremely overbought, indicating a potential upcoming price correction.
Predictions remain optimistic for Zcash, with possible price targets reaching $900–$1,000 if the uptrend continues.

ZEC's Overbought Status Raises Concerns

Zcash's price surge has raised alarms among traders, as technical analysis indicates ZEC might be in an overbought position. Many analysts caution a correction could occur in the near future, although there is still room for additional price increases.

ZEC/USDT daily chart. Source: TradingView

Notably, analyst Arthur Hayes has forecasted that ZEC might reach $1,000 by 2025 and could even hit $10,000 over the long term. Nevertheless, traders must remain vigilant due to the significant risk of a corrective pullback.

Zcash’s RSI Hits Record High

The weekly relative strength index (RSI) for Zcash reached an unprecedented level of 94.24 this week, the highest it has ever been recorded. Historically, when ZEC enters this overbought territory (above 70), it usually continues to rise for a few weeks before experiencing sharp corrections varying from 45% to over 90%.

ZEC/USDT weekly chart. Source: TradingView

The current rally is remarkable due to its duration; the RSI has remained above 70 since late September, marking the longest streak of overbought conditions in Zcash's history.

ZEC/USDT weekly chart. Source: TradingView

With this backdrop, several analysts, including Altcoin Sherpa, project that Zcash could soon undergo a harsh correction. They warn that ZEC's price might plummet to around $500 in November, down from its current levels exceeding $600.

Source: X

Market Activity Reflects Overheating

Recent market data shows that ZEC's activity has entered an "overheating" zone, marked by significant red clusters in the Spot Volume Bubble Map from CryptoQuant.

Zcash spot volume bubble map. Source: CryptoQuant

Historically, when ZEC has entered similar conditions, it has suffered declines of over 95%, as seen in the 2021-2022 timeframe. On previous overbought occasions recorded on the weekly chart, ZEC's price has approached its 20-week exponential moving average (EMA), which currently rests around $230—almost 62% below current prices.

Analysts are closely monitoring the four-hour chart, where ZEC remains within a steep parabolic channel. The price is currently testing a crucial support level formed by both the 20-EMA and the lower parabola trendline.

ZEC/USDT four-hour chart. Source: TradingView

Should ZEC successfully rebound from this support zone, it may reignite bullish momentum and push prices toward the upper pattern range, which aligns with the $900 to $1,000 targets mentioned earlier.

In conclusion, although Zcash has seen massive gains recently, traders should prepare for the possibility of market corrections while keeping an eye on the potential for further upward movement.