Main Points:
ZEC’s 500% rally in October is driven by endorsements from high-profile figures and significant short liquidations.
A rising wedge formation raises concerns of a possible 30% correction towards the $260–$270 support level in November.
Zcash (ZEC) is unsettling crypto bears this Halloween, standing out as one of the few coins gaining momentum on Friday.
The privacy-centric cryptocurrency surged 7.75% to $390.75, marking its highest point since 2018, while the overall crypto market capitalization saw a 2.50% decline during the same timeframe.
ZEC has climbed nearly 500% in October, contrasting sharply with the crypto market’s 4.50% drop.
What is propelling Zcash’s incredible recovery?
Celebrity Endorsements Boost ZEC
High-profile endorsements have significantly enhanced ZEC’s bullish scenario.
The Zcash price started to soar after well-known investor Naval Ravikant described it as an “insurance against Bitcoin” in a post on Oct. 1. It increased over 60% that day and has maintained its upward trajectory since then.
Mert Mumtaz, co-founder and CEO of Helius, a Solana-focused development entity, publicly suggested a $1,000 target, bringing Zcash into the social limelight and motivating momentum traders to jump in.
Recently, BitMEX co-founder Arthur Hayes further fueled the ZEC rally with a $10,000 target, resulting in a 30% increase in ZEC’s price.
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These increases mirror the trends observed in the Dogecoin (DOGE) market during 2021. The memecoin surged by an average of 33% following supportive tweets from Elon Musk, as noted by researcher Dabian Fablander.
ZEC Short Liquidations Propel the Surge
Short liquidations have served as a catalyst for Zcash’s price increase.
ZEC futures have witnessed nearly $65 million in liquidations over the last two weeks, with over half attributed to short positions, according to CoinGlass data.
This disparity indicates that ZEC’s breakout has been propelled by a classic short squeeze, where traders betting against the privacy coin were compelled to close their positions as prices climbed.
Adding to the upward pressure is retail FOMO, evident from increased online searches for the term “Zcash” throughout October, especially on days of significant price movement.
The cycle of buying triggered by short liquidations, combined with ongoing FOMO among retail traders, has sustained the rally beyond its initial drivers.
ZEC Technical Indicators Signal a Potential 30% Drop
On the daily chart, ZEC is forming a rising wedge, a pattern often signaling bearish reversals after prolonged upward trends.
The upper boundary of the wedge currently hovers near $450, indicating ZEC might still advance towards this point before momentum diminishes.
Nonetheless, a bearish divergence between the rising price of the token and declining RSI readings (currently near 74), paired with diminishing trading volumes, suggests waning buying power.
If sellers manage to push ZEC below the wedge’s lower trendline, this pattern could confirm a 30% decline towards the $260–$270 region in November.
This $260-270 area aligns with the 20-day exponential moving average (20-day EMA, represented by the green wave).
This article does not offer investment advice or recommendations. All investments and trading activities carry risks, and readers are encouraged to conduct their own research before making any decisions.
