Technical Analysis and Market Entry: Zcash (ZEC) Subject to Further Fall as Price Breaks Key Technical Structure 

Zcash
  • The Zcash price has been falling for nine consecutive weeks, dropping some 60%.

ZEC/USD: Recent Price Behavior 

The Zcash price has been hard hit over the last nine consecutive weeks. It has seen ZEC/USD drop some 60%; the price fell from $116 down to the current levels of around $40. ZEC is trading at the lowest levels seen since the back-end of December 2018-January 2019. It is flirting with two and a half year lows. 

ZEC/USD weekly chart.

A Host of Problems for Zcash 

There are a couple of downbeat developments noted note around Zcash. It is known that Zcash is facing some financial constraints. The operating company behind ZEC, Electric Coin Company (ECC), recently reported that it lost money in the first quarter of 2019. 

The company operated with an average monthly deficit of $186,000 and received about 6,157 ZEC per month to pay for employees. Based on the average ZCash exchange rate, it amounts to $450,000, while the company’s expenses, including employee salaries, were closer to $635,000.

ECC did, however, report an increase in total ZEC holdings.

“The company’s first-quarter ending amount of USD and Zcash was approximately $5.2M. The company currently holds approximately $6.4M worth of USD and Zcash.”

Trademark Dispute 

The two companies responsible for building the privacy-focused Zcash cryptocurrency have fallen out in a dispute over the “Zcash” trademark. Their joint goal was to create a system whereby both parties, the Electric Coin Company, spearheaded by Zooko Wilcox, and the non-profit Zcash Foundation, would have joint control.

However, ECC is refusing to press ahead and has stalled the negotiations. As a result, the foundation has put on hold plans to help sort out Zcash’s impending funding crisis. It creates much doubt and puts the long-term security of the network at risk. The deadline is less than a year away.

Trade Recommendation

Price action recently broke out of a bearish pennant structure, which had contained the price between 14-28 August. ZEC/USD has since broken out and retested this pattern; as a result, it left the door open to further downside. In proximity to the pennant sees a critical area of demand that runs from $56 down to $45. 

ZEC/USD daily chart.

Given the noted breakout and retest, eyes are on a deeper fall from the current market price. In terms of targets to the downside; $35, $30 and then $25 are eyed. The noted levels of interest are depressed prices last seen between February-March 2017. 

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.

Author:
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.