Zcash (ZEC) has jumped by nearly 3% in the past 24 hours after the token entered our “hot” buy zone, following a strong decline from its recent multi-year highs.
In the past week, ZEC has accumulated a 10% retreat, although the token is still in positive territory when it comes to its year-to-date (YTD) gains.
Its impressive run from around $600 to $1,700 in just a few months shows that this blockchain’s core privacy use case is currently in high demand.
Odds of a Rate Hike Stood Unchanged After the FOMC Minutes
Macroeconomic conditions remain stable, as the market did not react at all to the release of the FOMC minutes on Wednesday. Odds of a rate hike in October stood unchanged at less than 20% after the report came out.
It appears that a lower-than-expected monthly variation in the PCE Price Index in August eased the pressure on the Fed to take action.
This supports the continuation of the rally for cryptocurrencies in the mid-term, but the market seems to be needing a breather desperately before that.
The release of the NU7 network upgrade on the Zcash testnet recently continues to be a project-specific tailwind to keep in mind if the rally resumes, as it could lift the project’s valuation to even higher levels.
This technical overhaul should reduce the blockchain’s transaction settlement speeds from 75 seconds to 25 seconds, further strengthening its core use case of masking crypto transactions.
Shielded Transactions and Social Volumes Dropped Sharply
Data from ZecHub shows a decline in the percentage of shielded transactions last week from a peak of 56% two weeks ago to 39% as of last Sunday.
This could be the result of the latest sell-off that ZEC experienced. However, at these levels, shielded transactions as a percentage of the total are still quite high compared to historical standards.
Meanwhile, social volumes for Zcash, a metric that tracks the number of times that the token is mentioned across social media and other similar platforms, made a bearish crossover.
This has happened multiple times in the past, and it has commonly resulted in a strong drop in ZEC in the near term. Hence, an ideal approach to take advantage of this pullback would be to use dollar-cost averaging (DCA) to smooth the cost basis, as nobody can predict how low the token may go before its rally resumes.
ZEC Needs to Stay Above $1,150 to Retest the $1,650 Area
For ZEC, a pullback was due long ago, as the token rallied relentlessly for weeks. Now, it appears that the correction was faster than expected, as we hit the middle area of a buy zone we shared in a recent Zcash price prediction article in just a few days.
Zcash just bounced strongly off $1,150, which was our ideal entry for a long position.
Hence, the long position we set forth at that time is already in positive territory. This position offered a 3.1x risk-reward ratio if the entry was timed correctly, with a target set at $1,650.
Meanwhile, if ZEC drops below $1,000, that should mark the end of a bullish phase, at least for now, and will probably result in a retest of the 200-day exponential moving average (EMA) at some point.
