Zcash Price News: ZEC Rally Hits Tipping Potential Point at $500

Zcash (ZEC) has recovered strongly after a strong decline last week prompted by technical flaws in the blockchain’s coding.

As we reported recently, the project’s founder, Zooko Wilcox, revealed an exploit that would have allowed unauthorized parties to mint an unlimited amount of ZEC tokens.

The news caused a strong drop in the price of ZEC, pushing it down to $250 at some point on June 5 as this technical weakness undermined the blockchain’s credibility.

However, the buying pressure at this level quickly accelerated, possibly as a big load of buy orders were sitting at that particular level and managed to contain the flash-crash.

The price has kept rallying since then, recovering to $500 as of this morning as volumes have skyrocketed.

In the past 24 hours alone, trading volumes have doubled to nearly $1 billion, currently accounting for 10% of the asset’s circulating market cap.

This rally has partially been caused by a short squeeze, as data from CoinGlass shows that $20 million worth of ZEC short positions have been blown up in the past two days.

Even though this figure seems low, for a token like Zcash, $10 million in daily liquidations is a threshold that has only been hit a handful of times in the past 90 days.

Orchard Pool Experiences Largest Withdrawal On Record

In a recent Zcash price prediction, we highlighted that the token was likely going to hit $500 in the near term as post-exploit buying pressure seems to have accelerated. However, we expect a progressive decline if the price action rejects a move above this area.

The reason for this is that some of the project’s top backers, like Arthur Hayes, have jumped ship, as the developing team’s ability to keep the blockchain safe is under scrutiny.

Wilcox was unable to verify if the exploit was taken advantage of during the time it was undetected, which raises serious questions about the integrity of ZEC’s current circulating supply.

We have also seen a strong decline in the total supply of ZEC within the Orchard Pool, the project’s largest shielded pool. Since Wilcox’s disclosure, nearly 800,000 ZEC tokens have been taken out of the protocol.

This translates into a $400 million outflow at today’s prices, meaning that this has been one of the largest declines on record in Orchard’s shielded supply.

ZEC is Still at Risk of Dropping to $300 Despite the Rally

Heading to the chart, we are not yet seeing the kind of pushback that we need from sellers at this key level to confirm that this resistance level will hold.

The Relative Strength Index (RSI) just jumped above the signal line and rose to 55, indicating that bullish momentum is accelerating.

With trading volumes rising, we need to proceed with caution in this case. Market makers could fool bulls by pushing the price above $500 before they fully capitulate on Zcash and dump their entire holdings.

The true signal here is what happened earlier this month. The rest, at least for now, is pure noise.

If ZEC drops below $500 and we get a confirmed sell signal in the daily chart from our system, this could set the stage for a rapid decline to $300, which would create an interesting opportunity to short ZEC at a point when the project’s fundamentals have weakened.