Technical Analysis and Market Entry: Zcash May Need to Drop Deeper to Attract the Big Buyers Again

  • Zcash is stuck within a bearish trend to the south, having dropped some 50% over the last six weeks.
  • The price is fast approaching a critical demand area and a failure to hold would likely send the price into free-fall.

ZEC/USD: Recent Behavior 

Zcash is moving within a very steep and punishing trend to the south. The current bearish tone has been observed since the late part of June. The price had initially been trading up at heights of $135 before being attacked by the market bears. ZEC/USD was enjoying a strong push north after bottoming out at the back-end of 2018 into early 2019.

The bulls managed to take the price from a low area of $45, where decent buying interest was picked up. ZEC gained a whopping 200% from February right through until the latter stages of June, as mentioned above. The price hit the highest levels seen since November 2018, running towards a huge supply area, which had forced ZEC/USD to its lows.

ZEC/USD has dropped just over 50% during the detailed price fall. Furthermore, it is only another 28% before returning to the low area of 2018 and 2019. What looked to be a promising recovery for Zcash, now appears to up to very much vulnerable to completely giving back the gains and potentially more.

ZEC/USD daily chart.

Zcash Founder Seeking New “Dev Fund”

The founder of Zcash and CEO of Electric Coin Company (ECC) Zooko Wilcox recently appealed for the creation of a new “Dev Fund.” The fund would be supporting and enhancing the future operations of Zcash. In terms of the move, it does follow an ongoing debate over the continuation of the project’s “founder’s reward.” The issue had taken center stage at Zcon1 and was said to have driven a part of the zcash community to branch off into Ycash, a new network.

Wilcox wrote in an open letter to the community:

“I hope that the community will decide to renew the ‘Dev Fund’ structure, allocating coins from future block rewards for core support functions such as software development, user support, business development, regulatory and government outreach, security auditing and monitoring, educational and marketing initiatives, new protocol development, and so forth.”

Trade Recommendation

Given the current pace of downside and technical structure, eyes for the time being are on a further downside. The target area of interest would be thee $55-$45 price range, the zone which had provided support on several occasions between December 2018-May 2019. Once ZEC/USD retreats back down to this low territory, then a buy position would be attractive.

Targets to the upside would be $100, $115 and then $137. Upon entry, stops would be placed just below the $55-$45 zone at $43. A break and daily closure below would take a buy position off the cards.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock

Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.