Zcash Drops 57% From Its Peak – Is The ZEC Rally Over?

Zcash (ZEC) is among the worst-performing tokens in the crypto market in the past 7 days, with losses exceeding 35%.

The token has collapsed by 57% since it hit a peak at $700, as privacy tokens seem to have been the first to be dumped by investors during the latest sell-off.

ZCash Daily Liquidations – Source: CoinGlass

Data from CoinGlass shows that ZEC faced its fourth biggest liquidation event two days ago, as $22 million worth of long positions were wiped out of the market. In addition, on November 27, another $18 million was taken out as the token kept dropping sharply.

Meanwhile, data from Artemis shows that trading volumes were lower the second time that Zcash reached $700 per token compared to when it hit $648. This was a bearish divergence that indicated that buying interest was already fading.

Volumes have been progressively decreasing until they hit a 30-day low of $636 million on November 29. Since then, they have been progressively recovering, possibly as ZEC is approaching a key level.

Zcash Made a Double Top at $700

Zcash started to drop after it made a double top at $700 last month. This is typically a high-probability pattern, especially when it pops up in the daily chart.

The price action subsequently lost the $440 support, a level from which the token had bounced previously, and has kept declining in 5 out of the past 6 sessions.

ZEC/USD Daily Chart (Coinbase) – Source: TradingView

The $300 price zone had acted as resistance for the token in the past and could now turn into support after this sharp drop if the downturn pushes ZEC to that threshold.

Despite this pronounced decline, the Relative Strength Index (RSI) has not yet reached oversold territory, possibly as it is coming out of an extreme overbought reading of 88.

This drop could also be the result of a normal reversion to the mean move, as ZEC is now approaching the 200-day exponential moving average as well.

Bullish Structure Holds Despite the Drop

As we can see in the daily chart, a bullish structure persists despite the latest drop, as the $300 area is the most likely previous high that the price action is now trying to retest.

If we get a strong bounce off this level, especially if trading volumes confirm it, Zcash could start recovering. Whether it can climb back to $700 or not, that’s an entirely different beast. However, privacy tokens are still among the best-performing categories so far this year.

In the case of ZEC, year-to-date gains still stand at 480%. So, even though holders have taken a big hit lately, they are still sitting on some handsome profits. Meanwhile, Monero (XMR) has also doubled during this same period.

Search Volume for “Zcash” – Source: Google Trends

Interestingly, search volumes of the term “Zcash” reached a peak on November 7. Search interest is classified on a scale of 100. After reaching that maximum level back then, this metric has now dropped to 11.

Extrapolating that trend to the price action, the price peaked for the first time on November 7. It then made a double top a few days after and then started to collapse. With search interest sitting at these lows, a comeback to $700 seems highly unlikely unless the metric makes a takes a big U-turn in the next few days.