Despite the crypto market's volatility, Zcash shines with a staggering 178% increase in the past month. However, beneath this impressive surge, concerning technical signals are emerging: excessive leverage, RSI divergences, and risks of massive liquidations.
Zcash continues to defy market gravity while most altcoins struggle to maintain their support levels. ZEC has surged by over 17% in 24 hours, confirming its position as a leader among privacy-focused cryptocurrencies. This bullish momentum originates from the breakout of a bullish flag pattern validated on October 24, a technical formation that has propelled the price from one support level to another.
Since this decisive breakout, ZEC has consistently reached its successive price targets, recently crossing the psychological barrier of $438. Technical analysts are now positioning their next major target at $594, with extended projections suggesting even higher potential according to Fibonacci extensions applied to the current movement.
However, this meteoric rise doesn’t come without risks. Technical indicators are beginning to emit warning signals that could signal a first serious test for the bulls. The question is no longer whether a correction will occur, but rather when and with what magnitude.
On-chain data analysis reveals a concerning accumulation of leveraged positions. The open interest on Zcash futures has reached $337 million, an unmatched peak in six months that equals last October’s high. This massive concentration of derivative contracts demonstrates traders’ aggressive engagement, with positions predominantly biased to the upside.
On Binance alone, long positions exposed to liquidation total $30.27 million, nearly triple the short positions established at $12.43 million. This stark imbalance indicates that most shorts have already been liquidated during the uptrend, leaving the market dangerously skewed toward longs.
This type of configuration makes the rally particularly vulnerable to technical corrections. Even a modest pullback could trigger a domino effect of long liquidations, mechanically amplifying the decline. If ZEC slips below $450, a cascade of liquidations could be triggered. More critically, a fall below $342, corresponding to a key Fibonacci retracement level, would activate all long liquidations positioned on the 7-day timeframe, potentially causing a violent purge of the derivatives market.
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Gaston has been a writer for over 7 years and a passionate cryptocurrency enthusiast since 2020. He loves exploring the crypto ecosystem and is now dedicated to sharing his insights and discoveries through InvestX.
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