Zcash (ZEC) has experienced a dramatic surge of approximately 1,500% over the past two months, reaching a high of $750, a level not seen since January 2018. This significant price increase has been partly fueled by endorsements from notable figures in the cryptocurrency space, including Naval Ravikant and Arthur Hayes.
Arthur Hayes, in particular, has projected that ZEC's price could reach $1,000 in 2025 and potentially $10,000 in the long term. Despite these optimistic outlooks, technical indicators are signaling substantial downside risks, suggesting that traders should be prepared for a significant price correction.
ZEC Reaches Record Overbought Levels
The weekly relative strength index (RSI) for Zcash recently hit 94.24, marking its highest reading on record. Historically, ZEC's price has shown a tendency to continue its upward trend for several weeks after entering the overbought territory (above 70). However, these rallies are often followed by sharp, multimonth corrections that can range from 45% to over 90%.
A unique aspect of the current rally is its duration. The RSI for ZEC has consistently remained above 70 since late September, representing the longest sustained period of overbought conditions in the cryptocurrency's history.
This prolonged overbought state has led several analysts to anticipate a sharp correction in the near future. For instance, Altcoin Sherpa commented that ZEC presents a "great short" opportunity and could experience a "violent end." Similarly, traders Edward Morra and DarkSide have suggested that ZEC's price might fall to $500 in November from its current levels above $600.
ZEC Spot Volume Metric Signals Warning
The market activity for ZEC has entered an "overheating" zone, as indicated by CryptoQuant's Spot Volume Bubble Map, which displays the most significant red cluster on record. This metric suggests an unusually high level of trading volume.
Historically, similar signals have preceded significant downturns. For example, in 2021-2022, ZEC experienced a crash of over 95% after displaying a less severe version of this signal.
Previous overbought corrections on the weekly chart indicate that ZEC's price is approaching its 20-week exponential moving average (20-week EMA), which is currently situated around $230. This level is approximately 62% below the current trading prices.
On the 4-hour chart, ZEC is currently trading within a steep parabolic channel and is testing a crucial support confluence formed by the 20-EMA and the lower trendline of the parabola. A successful rebound from this support zone could potentially reignite bullish momentum and drive prices toward the upper range of the channel, estimated between $900 and $1,000. This potential upward movement aligns with Arthur Hayes' earlier predictions.
