Zcash Price Faces Potential Drop to $256 Amid Bearish Double Top Formation

Zcash (ZEC) is showing signs of a potential price crash, developing a bearish double top pattern after experiencing a significant surge. While the privacy-focused cryptocurrency reached a high of $734.96 in early November, it has since seen a drop of approximately 30%. Current market sentiment suggests increasing bearish pressure.

Key Takeaways

Zcash surged nearly 850% from $76 on October 1 to $734.96 by November 8 before dropping to around $512.
The recent surge was fueled by increased demand for privacy-focused cryptocurrencies and concerns about blockchain surveillance.
A bearish double top pattern has formed, indicating a potential price drop, with support levels around $400 and a significant target at $256.41.
Market sentiment is leaning towards bearishness, as suggested by declining futures activity and a shift in trader positions.

Zcash price risks crash to $256 as bearish double top pattern takes shape.

Zcash's Recent Performance

Zcash's price has been on a rollercoaster ride, climbing over 850% from its October low. On November 8, it peaked at $734.96, marking its highest value in seven years. However, the coin has since seen a correction, currently trading at around $512—a 30% decrease from its recent high.

This price surge can be attributed to several factors, including increased investor interest in privacy-centric cryptocurrencies amid rising concerns about surveillance and regulatory pressures on more transparent platforms like Bitcoin. Additionally, other privacy coins such as Monero, Railgun, and Dash have also seen significant gains, with rises of 24%, 31%, and 49%, respectively.

ZEC price has confirmed a double top pattern on the 4-hour chart.

Current Market Sentiment

Despite the previous price surge, the current market sentiment regarding Zcash appears to be bearish. Data from CoinGlass indicates that open interest in ZEC futures has dropped by 28% in the last 24 hours, suggesting traders are closing their positions and indicating uncertainty about the ongoing price trend.

Moreover, the long-to-short ratio has dipped below 1, pointing to an increasing number of traders betting against Zcash instead of anticipating further gains. This shift in sentiment could put additional downward pressure on Zcash's price in the near term.

Technical Analysis

On the 4-hour chart, Zcash has confirmed a breakdown from a double top pattern, a technical indicator that often signals a price decline. The neckline of this double top is located at $503.42, while the peaks are recorded at $749 and $683.

Momentum indicators also reflect bearish trends. MACD lines are trending downward with a widening gap, suggesting that sellers are gaining strength. Additionally, the Relative Strength Index (RSI) is decreasing and has room to fall, potentially indicating further selling pressure.

Given the current technical setup, Zcash’s price could attempt to find support around the psychological level of $400, which aligns with the 50% Fibonacci retracement. If the price breaks below this level, it could lead to a significant drop towards a target of $256.41—calculated by subtracting the height of the double top from the neckline price.

Conversely, if Zcash can rebound above the $600 resistance level, it would invalidate the bearish outlook and suggest a potential recovery.

In summary, while Zcash has experienced impressive gains, the current indicators and market sentiment suggest caution, with a significant risk of continued price decline.