Zcash [ZEC] Faces Pressure After $4.12 Million Exits Kraken

Zcash [ZEC] Faces Pressure After $4.12 Million Exits Kraken – Is a Squeeze in the Works?

Zcash [ZEC] has seen a significant movement in the market with a newly established wallet withdrawing 7,714 ZEC, valued at approximately $4.12 million, from Kraken. This withdrawal suggests a shift in trading dynamics, as the liquidity on exchanges tightens while the sentiment in derivatives markets remains bearish. This article analyzes the implications of these developments and explores whether ZEC may be positioned for an upward price movement.

Key Takeaways

A new wallet withdrew 7,714 ZEC ($4.12 million) from Kraken, indicating a potential market shift.
ZEC has established a rounded bottom and reclaimed support levels, hinting at future upward momentum.
The market shows a heavy short positioning, but price stability indicates growing stress on these positions.
Liquidation data highlights the pressure on short sellers, suggesting a shift toward a bullish trend.
Overall, the current market conditions favor a potential rise toward the $800 level for ZEC.

Zcash [ZEC] Faces Pressure After $4.12 Million Exits Kraken – Is a Squeeze in the Works?

Market Dynamics: A Significant Withdrawal from Kraken

A newly opened wallet withdrew 7,714 ZEC from Kraken, which is worth about $4.12 million. As this wallet had no prior activity, it suggests that the intent may not be for immediate trading. The withdrawals were carried out in organized batches, indicating a clear strategy. Interestingly, despite this large exit, the price of ZEC did not react strongly right away, as the liquidity in derivatives markets absorbed this movement. However, the supply on exchanges is tightening, hinting that selling pressure may have diminished structurally, rather than emotionally. Historically, similar outflows have often preceded delayed price increases rather than immediate spikes, suggesting that current spot behavior is at odds with the prevailing bearish sentiment in derivatives.

Price Analysis: A Rounded Bottom Forms Under Resistance

Zcash has defended the demand zone between $300 and $320 multiple times, resulting in a rounded bottom formation after a lengthy decline. This pattern marked an exhaustion of the downward trend rather than a temporary bounce. From this base, the price managed to reclaim $401 and push past $528, confirming a series of higher lows. At present, Zcash is trading around $536, entering the $520-$550 resistance area. This zone corresponds to previous breakdown points and short-term supply levels, but the pullbacks remain slight, showing controlled selling behavior. Above this resistance, a key neckline is positioned between $680 and $720, and a clean break could pave the way for upward movement toward the psychological level of $800. The MACD lines have turned positive, and expanding histogram bars further support this momentum recovery.

ZEC price action analysis
Source: TradingView

Short Positioning Remains Dominant

Data from Binance reveals that 65.35% of Zcash accounts are currently short, compared to 34.65% long, resulting in a Long/Short Ratio of 0.53. This significant short dominance generally indicates strong downward continuation. Nevertheless, the price has not broken lower; instead, ZEC has been forming higher lows above reclaimed support levels. This discrepancy suggests that market positioning carries more risk than conviction in the overall trend. Shorts have been increasing their exposure without successfully pushing prices below $401, causing bearish pressure to lose its effectiveness. Each unsuccessful breakdown further intensifies the stress on short positions, leading to a shift from trend-driven selling to risk-driven selling.

Short Positioning Data
Source: CoinGlass

Increasing Short Pressure Revealed by Liquidation Data

Short liquidation data underscores the growing stress among short sellers. As of now, short liquidations have reached $1.77 million, while long liquidations are only at $182,000. Notably, Binance accounted for $967,260 in short liquidations, with Hyperliquid contributing an additional $411,730. These liquidations occurred during moderate upward movements towards the $535-$540 range, rather than during significant breakouts. This reaction highlights the shorts' low tolerance for even small price increases while longs have shown resilience during pullbacks. Consequently, price stability continues to disproportionately impact shorts more than buyers, increasing the likelihood of volatility tilting to the upside.

Liquidation Data
Source: CoinGlass

Funding Rates Steady as Leverage Fades

The Open Interest-weighted funding rates have stabilized around +0.0027% as of the latest reports, recovering from deeply negative readings earlier this month. This change indicates a reduction in bearish dominance without an influx of aggressive long leverage into the market. Importantly, funding levels remain moderate rather than overheated, suggesting that upside potential is building without excessive risk from leverage. The Open Interest is also stable, indicating repositioning rather than capitulation. Therefore, Zcash appears to be in a structurally healthy recovery phase, where pressure can resolve without the instability caused by leverage.

Funding Rates Analysis
Source: CoinGlass

In conclusion, ZEC's current market setup favors upward continuation as supply tightens due to spot accumulation, while derivative traders continue to hold significant short positions. The stress on these bearish positions, coupled with stabilizing funding rates, further reinforces that leverage is no longer suppressing prices. With sellers losing their effectiveness and shorts facing continual pressure, the market is likely moving toward forced repositioning. This combination of diminishing exchange supply, a crowd of short sellers, and controlled leverage indicates a promising upward move toward the $800 mark driven by market pressure rather than speculation.

Final Thoughts

As Zcash navigates these market dynamics, it remains crucial for traders and investors to monitor both liquidity trends and the balance between short and long positions. Understanding these aspects can provide insights into future price movements and potential opportunities in the ZEC market.