Zcash price has gone parabolic recently, transforming the often sleepy coin into the best gainer in the past few days. It jumped to a high of $180 on Saturday, up by nearly 400% from its lowest level in September.
Why the Zcash Price Has Soared
The ongoing ZEC price rally has brought its market capitalization to over $270 billion. Its volume has also jumped in the past few days, while shorts worth millions of dollars were liquidated.
The ongoing surge stemmed from an announcement by Grayscale that it would launch a trust dedicated to the coin. This launch raises the possibility that the company will ultimately file for an ETF dedicated to Zcash, a move that will lead to more demand.
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Zcash is one of the biggest privacy-focused tokens in the crypto industry, competing with the likes of Monero and Dash. It facilitates privacy by giving users a choice between a transparent and a shielded transaction.
The transparent transaction is similar to that of other coins like Bitcoin and Ethereum in that they are available on a public ledger. The shielded transactions, on the other hand, encrypt key information like the sender, receiver, and amount by using zero-knowledge proofs.
Another notable aspect about ZCash is that it was built on Bitcoin’s codebase. Indeed, it has a supply limit of 21 million and uses the proof-of-work mechanism.
ZEC Price Technical Analysis
The daily timeframe chart shows that the Zcash price bottomed at $34.63 in August and then rebounded to a high of $180 this week. Most of these gains accelerated after the coin jumped and crossed the important resistance level at $55.83, its highest point in May.
The Relative Strength Index (RSI) and the Stochastic have all pointed upwards. However, the coin has now moved into the overbought level.
ZCash is also in the markup phase of the Wyckoff Theory. Therefore, the most likely scenario is where it reverses and resumes the downtrend, potentially to the psychological point at $100.
This retreat will happen because it is overbought, and investors will opt to book profits. It will also drop as investors sell the Grayscale news.
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