While the entire crypto market was bleeding, Zcash (ZEC) started December with a massive one-day pullback, leading the losses among the major cryptocurrencies. While some market observers suggest the altcoin is positioned for a big move, others have warned the price risks another major correction in the coming weeks.
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Zcash loses key support levels during crash
After the market correction late Sunday, Zcash has lost crucial levels and fallen to a one-month low. Over the past three months, the cryptocurrency has seen a parabolic rally, surging more than 1,775% to an all-time high (ATH) of $750 in early November.
Since the ATH rally, the altcoin has been trading within the $440-$720 level, fluctuating between the upper and lower limits of the range amid the recent market volatility. However, ZEC’s late November pullback failed to retest its key support area, closing the day below this area for the first time in almost a month.
After losing this zone, Zcash fell further below other key support levels, breaking the $400 mark and hitting a local low of $328 on Monday morning before bouncing towards the $340 area.
Amid this performance, some market observers warned that the altcoin could be in trouble and that more bleeding could occur in the coming weeks. Sjuul from AltCryptoGems marked that ZEC records the largest price declines in the weekly and daily time frames, with declines of 40.2% and 24% respectively.
The analyst previously pointed out that the cryptocurrency lost its uptrend after falling below the EMA200, with “a perfect bearish retest followed by a strong rejection” last week. As a result, Sjuul suggested that if Zcash fails to reclaim the key moving average, the cryptocurrency would be in position for a breakdown to lower support levels.
The same goes for Altcoin Sherpa considers that ZEC could fall another 30%-40% to the $200 area after losing the crucial $440 support. Nevertheless, he added that the price is likely to rise in the near term during the retracement.
ZEC’s correction: nothing to worry about?
Mert Mumtaz, co-founder and CEO of Helius, confirmed that a correction after a 700% rally “is normal,” adding that the privacy token “looks great” on higher time frames. Notably, the cryptocurrency still shows an increase of 700% and 485% over the three-month and one-year time frames.
The CEO also highlighted Zcash’s strengths: “privacy is not a story, private money is the whole purpose of crypto,” suggesting the altcoin is positioned to challenge other leading cryptocurrencies such as XRP.
Meanwhile, still a pseudonymous market watcher considers that Zcash is preparing for a big step despite the correction. According to X analyst Make Sense, the cryptocurrency is at a make-or-break level after falling to $320, the first major support area below the November range.
If ZEC holds the current range, the price could regain its recently lost range and bounce towards the mid-$500-$600 range. On the contrary, if it loses its current levels, the cryptocurrency could retest the $280 and even $200 area, he confirmed, before a trend reversal takes place.
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“This is where market makers determine the next trend: early bounce → mid-range rally or deep sweep → full trend reversal. Either way, volatility is about to explode,” he explained.
At the time of writing, Zcash is trading at $338, down 20% in the monthly time frame.
Featured image from Unsplash.com, chart from TradingView.com