Zcash (ZEC) has retreated by nearly 25% in the past 7 days, making this privacy coin the worst- performing token in the top 10 during this period.
As a result of this strong drop, ZEC has lost its $1,000 psychological support and could be about to experience a much steeper decline.
Macroeconomic conditions deteriorated this week as inflation in the United States came in hotter than analysts expected. In October, the Core Consumer Price Index (CPI) rose by 0.3%, surpassing the market’s consensus estimate by 10 basis points.
Earlier in the day, one of the Governors of the U.S. Federal Reserve, Christopher Waller, commented that he was in favor of taking more aggressive actions to curb inflation if it showed signs of accelerating.
The market interpreted this as the overall opinion of the Federal Open Market Committee (FOMC), and analysts are now seeing a chance that the Fed will raise rates by 50 basis points during the December meeting.
Although this scenario still has low odds of 13.5% according to data from FedWatch, the fact that it is considered possible means that the market sees additional rate hikes in the future.
Zcash Experienced 5th Strongest Long Squeeze on Record
In the past 24 hours, the crypto market has experienced another strong wave of long liquidations, with $555 million being wiped out in the futures market as a result of this recent decline.
Zcash has jumped to the third spot, accounting for $35 million of that total, probably as the volume of stop orders sitting below $1,000 was quite high.
Yesterday’s liquidations were the fifth highest on record for the token, which explains the strength of the move and its potential implications for the price action in the near term.
A long squeeze could exacerbate Zcash’s decline toward its next support area, especially in this unsupportive macro backdrop.
Paired with persistent geopolitical tensions and depressed sentiment toward cryptocurrencies as a whole, we could expect the continuation of Zcash’s 5-day losing streak for what remains of the week.
ZEC Eyes Drop to $800 as Negative Momentum Accelerates
Turning to the daily chart, we maintain our bearish target of $807 for Zcash following a breakout below the token’s buy zone. This area is in confluence with the 200-day exponential moving average (EMA) and might be the last line of defense for bulls to prevent a much stronger drop to $500.
Negative momentum has accelerated according to the daily Relative Strength Index (RSI), as the oscillator has dipped below 40. This is typically interpreted as a sell signal, as it indicates that sellers are in control of the price action.
The market fully ignored the successful rollout of the NU7 network upgrade, even though that technical overhaul slashed Zcash’s transaction settlement times in half.
Sentiment remains bearish, and although ZEC is still theoretically in an uptrend as the price is still above the 200-day EMA, we are leaning toward a bearish outlook in the near term.