Zcash (ZEC) has experienced one of its most volatile sessions of 2025, falling sharply after a spectacular rally earlier this week. The token currently trades at $518, reflecting a steep 26% daily decline, following a period of explosive growth that had briefly pushed it to multi-year highs.
In the past 10 hours, ZEC saw massive liquidations, mostly from short positions, which according to some analysts triggered a classic short squeeze. This sudden surge forced traders betting against the token to close positions, accelerating the rally. According to Binance data, ZEC spiked from $403 to as high as $760 before correcting back toward its current range.
Chart Analysis: From Parabolic Rise to Steep Correction
The attached chart shows a clear parabolic climb followed by a rapid decline, a textbook example of high-leverage trading fallout. After peaking around $750, ZEC began to unwind as traders took profits and leveraged positions were liquidated.
Despite the sharp correction, the broader trend remains technically bullish, with higher lows forming since early November. Support is seen around $500, while resistance sits near $560–$580. If the current zone fails, ZEC could revisit the $470 area, where prior accumulation occurred before the short squeeze.
Market Metrics: Volume Surges Despite Price Drop
According to data, Zcash’s market cap has fallen to $8.44 billion, a 26% daily loss, even as trading volume rose 18% to $3.82 billion. This suggests that while prices are dropping, market participation remains intense, a common hallmark of speculative repositioning after extreme volatility.
With 16.28 million ZEC already in circulation out of a 21 million max supply, the network’s scarcity narrative continues to attract traders ahead of the upcoming halving event later this month. The volume-to-market-cap ratio at 45% reflects heightened activity typical of high-risk trading phases.
Catalysts: Halving Hype and Institutional Interest Drive Sentiment
The Zcash rally earlier this week was fueled by two main factors: the November 2025 halving, which will reduce block rewards, and renewed institutional exposure following reports that Arthur Hayes’ Maelstrom fund made ZEC its second-largest holding after Bitcoin.
These catalysts pushed ZEC up 1,486% in three months, marking its strongest quarterly performance since 2018. However, today’s pullback signals that speculative excess and profit-taking are cooling the overheated rally. Analysts also note that the RSI near 85 indicates overbought conditions, supporting the case for a short-term correction.
Outlook: High Volatility Ahead as Traders Rebalance
ZEC’s price is now entering a consolidation phase, with traders watching whether $500 can hold as support. A successful defense of this level could stabilize momentum and prepare the market for another upward push as the halving approaches.
If bearish momentum continues, however, ZEC could drop toward $470, triggering further liquidations. Regardless, with high institutional involvement, rising volume, and an active derivatives market, Zcash remains one of the most closely watched assets in the crypto space this week.