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On April 2, the leading privacy coin, Zcash, faced a downward trend after a major rally in the past few days, forcing its price to decline below $235.
After enjoying a rally, traders have started booking profits, which has created selling pressure on the cryptocurrency. This is one of the major factors behind today’s drop in the Zcash price. At the time of writing, Zcash ($ZEC) is trading at around $239 with a 5.96% drop on a daily chart and market capitalization of $3.97 billion, according to CoinMarketCap.
The daily trading volume of $ZEC revolves around $378.38 million with a total circulating supply of 16.6 million.
Zcash Price Falls as Crypto Market Squeezes Under Economic Pressures
The popular reason behind the drop is directly linked to overall crypto market dynamics and macroeconomic pressures. At present, investors are being very careful in the crypto market due to ongoing uncertainties. This includes a change in interest rates and reduced risk appetite in the entire financial markets.
Despite the downward momentum in the crypto market in the last few days, Zcash has shown an impressive resilience, as it surged significantly. However, every time it faced strong resistance, it quickly corrected.
Zcash follows its correlation with the major assets like Bitcoin, so any major liquidation and sell-off in the crypto market creates downward pressure on the cryptocurrency.
In this case, the drop comes after a period of rally where the price had risen over 10% in the last 1 month, which encouraged investors to book profit.
(Source: TradingView)
According to TradingView, the Relative Strength Index (RSI 14) is now sitting around 54. This clearly suggests that the cryptocurrency is currently in a neutral state, but is slowly suggesting that buying momentum is stronger than selling pressure. The cryptocurrency is not entered into oversold territory, where a rebound takes place.
At the same time, the Moving Average Convergence Divergence is suggesting ongoing short-term selling signals because the line stays below its average. There is a major support level at around $232, where buyers have defended prices before. On the other hand, there is a strong resistance level at $250, and if it soars above this level, the cryptocurrency will aim toward $260.
If the Zcash price holds above the lower support, traders will get a relief bounce. Though if it fails to maintain a rally, then it could test $220. These indicators clearly suggest that the current drop comes from momentum rather than investors’ low confidence in the cryptocurrency.
Amid the ongoing war between the U.S. and Iran, the financial world is facing extreme turbulence due to uncertainty around central bank policies and the stock market’s catastrophic fall. This creates an environment where investors pull back from high-risk assets, including cryptocurrencies.
Apart from this, the U.S. Federal Reserve has been warning that inflation could stay high, especially because of the ongoing Iran conflict and the new tariff war announced by President Donald Trump. The high inflation makes volatile assets like Bitcoin risky.