Zcash (ZEC) has gone up by 3% in the past 24 hours, following the rollout of a network upgrade called NU7 in the blockchain’s testnet environment.
The development team announced the beginning of this testing phase in the project’s official X account.
NU7 should lower transaction settlement times within the Zcash blockchain from around 75 seconds to 25 seconds. This is achieved by shortening block spacing, while rewards will also be reduced to prevent increased inflation.
The upgrade is expected to be fully rolled out on the mainnet at the beginning of November and should make Zcash more competitive and strengthen its core privacy use case.
Zcash ETFs Saw $100M in Outflows in the Past Week
Despite this project-specific news, exchange-traded funds (ETFs) linked to Zcash have been hit by a wave of daily net outflows since September 28. Data from SoSoValue indicates that investors have taken out nearly $100 million from these vehicles as the token dropped from a recent high of $1,700 to $1,300.
However, macroeconomic conditions improved a bit in the past few days, after the Federal Reserve’s preferred inflation gauge, the PCE Price Index, came in below the market’s consensus estimate for August.
Meanwhile, market sentiment continues to favor a bullish outlook, as the Crypto Fear and Greed Index is sitting in Greed territory at 68. This is the result of the latest market-wide rally, as it confirmed the beginning of a bullish cycle for cryptocurrencies.
Turning to on-chain data, usage of Zcash’s privacy feature has spiked in the past few weeks, as the percentage of shielded tokens rose to 56% at some point.
This has been the highest reading for this metric in years, and indicates strong demand for the network’s core use case.
Last week, shielded transactions accounted for 51% of the total supply for ZEC. This can be considered a tailwind for the token in the long term, as usage of the Zcash blockchain seems to be increasing substantially, which should result in higher demand for ZEC.
Zcash Just Hit a Hot Buy Zone and Could Retest $1,450 Shortly
Moving on to the charts, the daily price action shows that the latest bull flag for Zcash was invalidated as the token dropped below the lower bound of this pattern at $1,450.
This was the third of these setups that formed in less than two months and, as we stated in a recent Zcash price prediction, the rally desperately needed a breather before it could keep going.
The Relative Strength Index (RSI) had already made a bearish divergence, indicating that positive momentum was fading even though the price was increasing.
Hence, Zcash has now entered a pullback phase in which the market will look for price zones that can generate the necessary liquidity to resume its uptrend.
We believe that the “hottest” buy zone for ZEC has already been hit at $1,300 and that the rally should continue in the next few days, potentially eyeing that former area of support at $1,450 first.
However, if the price keeps dipping, the “deeper” buy zone, and the most attractive one from a risk-reward viewpoint, currently sits between $1,000 and $1,150.
