Zcash (ZEC) is showing indications of entering an extreme bubble phase, as revealed by a recent on-chain analysis. Current trading metrics surpass those recorded during the peak of its 2021 bull run.
On Tuesday, Ki Young Ju, CEO of on-chain data platform CryptoQuant, shared this concerning analysis on his X account, cautioning retail investors about potential risks. He bluntly remarked, “Sorry, but you’re retail if you’re buying Zcash now.”
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CryptoQuant CEO Issues Stark Warning
The CEO released a chart titled ‘Zcash: Spot Volume Bubble Map’, which tracks ZEC’s trading volume against its price since January 2020. In this visualization, the size of the circles reflects trading volume, while the color indicates the rate of volume change (cooling, neutral, heating, or hyper-heating).
The chart focuses on identifying a Distribution Phase, which occurs late in a bull cycle when trading volume is significantly high, but price appreciation is sluggish. This indicates that new investors are entering the market, resulting in a considerable turnover, or “handover,” of tokens from experienced holders.
The chart illustrates a notable period of high turnover that lasted approximately six months in the first half of 2021, coinciding with ZEC’s surge towards $300 per coin. This phase ultimately preceded a market-wide downtrend, leading to a price collapse and substantial losses for investors who purchased ZEC at the end of the rally.
Current Metrics Surpass 2021 Peak
The most concerning finding is that recent ZEC trading volume and price action indicate a larger bubble size than that experienced in the first half of 2021. If the broader cryptocurrency market is indeed in its final cycle stage, the analyst warns that a repeat of the 2021 collapse is quite possible.
ZEC has gained significant attention lately, skyrocketing by over 750% in the past three months. This seemingly inexplicable rally has driven price increases throughout the entire privacy coin sector.
High-profile figures have stoked the speculative excitement surrounding ZEC. Former BitMEX CEO Arthur Hayes tweeted on October 26 that he anticipates the ZEC price could soar to as much as $10,000 per coin. At the time of this report on Tuesday, ZEC is trading around $328, up from $308 when Hayes made his forecast.
