Zcash (ZEC) has surged nearly 100% over the past weeks, but derivatives data and technical indicators now point to a growing risk of a sharp pullback. After briefly touching the $1,700 region, the privacy-focused token fell below $1,500 on Wednesday, and traders are bracing for a possible 20% decline if key support levels fail.
On Thursday, ZEC traded near $1,500, leaving leveraged long positions accumulated at lower prices vulnerable to a correction. According to CoinGlass, more than $12 million in estimated long liquidations were wiped out when the price dipped below $1,488 on Wednesday. The three-month Binance ZEC/USDT liquidation heatmap shows approximately $44.39 million in cumulative long-liquidation leverage sitting below that level, with about $1.62 million concentrated directly at $1,488.
Liquidation heatmaps are estimates based on exchange data and do not guarantee future liquidations, but the current structure reveals a clear imbalance. Potential long liquidations below the market price are substantially larger than short-liquidation clusters above it. This suggests that if ZEC breaks below $1,488, forced selling could accelerate, pushing the price toward the next cluster and creating a cascade effect.
The derivatives setup is compounded by a bearish divergence on the daily chart. While ZEC has continued to print higher price highs above $1,650, the Relative Strength Index (RSI) has formed a lower high, indicating that momentum is fading. The RSI currently sits near 65, just below the overbought threshold, suggesting the token is stretched after its near-doubling advance.
Resistance between $1,700 and $1,750 remains the key hurdle for bulls. The lower boundary is a psychological and recent price resistance, while the upper portion contains the 4.236 Fibonacci extension near $1,750. A rejection from this zone would add confirmation to the bearish divergence, and traders may then shift focus to the $1,488 liquidation area as a potential trigger for increased volatility.
On the downside, the first major technical support is the 20-day exponential moving average (EMA) near $1,296. This level sits close to the upper boundary of a projected downside zone, with the 2.618 Fibonacci extension around $1,220 providing additional support. Together, these indicators create a target range of approximately $1,220 to $1,300, which would represent a decline of roughly 20% from current levels.
However, a decisive breakout above $1,750 would weaken the immediate bearish thesis. Such a move would ideally be supported by strong spot volume and a successful retest of the former resistance as support. Without that confirmation, a brief move above the zone could become a failed breakout and encourage profit-taking.
While the liquidation data and bearish divergence raise short-term risks, they do not negate the longer-term bullish trend. ZEC's fundamentals, including growing shielded supply and ETF inflows, remain supportive. But traders should be aware that leveraged positioning can amplify both upside and downside moves, and the current structure suggests more fuel for a downside cascade than an upside squeeze.
This article is for informational purposes only and does not constitute financial advice.
