Zcash Price News: ZEC Follows Bearish Path and Could Retest $300 Soon

Zcash (ZEC) has dropped by 14% in the past 7 days after rejecting a move above $500. Macroeconomic conditions remain unfavorable for cryptocurrencies, and that increases the odds of a strong drop in the near term.

Last week, the Federal Reserve’s new Chairman emphasized that inflation is a “choice” for the central bank. The market interpreted this as further confirmation that Kevin Warsh could be preparing to raise rates if needed.

The odds of a rate increase by September this year rose to around 70%, which means that the market is now pricing a rate hike of as much as 50bps.

This is a headwind for crypto prices, as it means that liquidity will continue to shrink. Moreover, Warsh abstained from providing guidance about future rate decisions, introducing an extra layer of uncertainty to the mix.

Technical Flaws Could Have Undermined Zcash’s Credibility

For a project like Zcash, whose technical integrity was under fire recently, this unfavorable macroeconomic landscape could further plunge its valuation.

As we reported in a recent article, the project’s founder, Zooko Wilcox, recently revealed an exploit that would have allowed unauthorized parties in the know to mint as many ZEC tokens as they wanted without anybody noticing.

He said that it was almost impossible to tell if this vulnerability was successfully exploited by bad actors, but said that the developing team quickly patched it.

Top backers like Arthur Hayes reacted negatively to the news and allegedly dumped their ZEC holdings. This event undermined the project’s credibility and could have a long-lasting impact on the public’s perception of Zcash.

Sellers Keep Zcash Below $500, Increasing the Odds of a Drop to $300

As we outlined in another recent Zcash price prediction, we were expecting a strong technical rebound to $500 as the token apparently hit a big stash of idle buy orders sitting at around $250.

This demand was strong enough to propel the price, but the selling pressure ramped up as soon as Zcash hit that $500 mark. That could initially be the result of a move to take profits from those who bought at that price floor, or it could be the beginning of a long-lasting downtrend.

The combination of project-specific headwinds and a challenging macroeconomic environment creates the perfect storm for Zcash. For this reason, we see high odds that the token will retest the $300 shortly.

Standing in the way of that target is the 200-day exponential moving average (EMA). Conservative traders may wait for the price to drop below that technical line before taking a short position.

Right now, the short position we suggested in the last article is in green territory. We expect some sort of pushback from bulls at that 200-day EMA, and even another retest of the $500 level from below before the downtrend fully unfolds.

Meanwhile, the Relative Strength Index (RSI) in the daily chart is currently in no man’s land. If it drops below 40, that should prove that bears are in full control of the price action.