Zcash: from glory to sudden volatility

A Violent Correction Amidst Extraordinary Gains

The cryptocurrency market experienced one of its most turbulent weeks, and Zcash was no exception. After accumulating returns of over 724% so far this year, ZEC suffered a sharp 24% retracement in just 24 hours, bringing its price down to $400.71. This movement reveals the volatile nature of the asset following a meteoric rise that seemed unstoppable.

The total global crypto market capitalization fell below $2.9 trillion, creating a context of widespread pressure. However, the most revealing aspect is not the decline itself, but the contradictory reactions it triggered across different market segments.

The Paradoxical Behavior: Buying on Weakness

While prices plummeted, on-chain data showed an unexpected phenomenon. Retail investors accumulated $72 million worth of ZEC tokens during the correction, interpreting this move as an entry opportunity rather than a warning. This pattern historically precedes significant recoveries when fundamentals remain intact.

The technical indicator Money Flow Index (MFI) remains above 50, confirming that capital flow continues to enter the asset despite volatility. Technical analysts identify a strong demand zone between $440 and $507, where buyers could accelerate their positions.

Warning Signs in Derivatives Markets

The outlook becomes significantly more complicated when observing the derivatives segment. In 24 hours, $236.6 million exited this area, reducing open interest to $861.5 million. These outflows reflect growing nervousness: institutional traders anticipate higher volatility and prefer to hedge.

This uncertainty triggered forced liquidations worth $32.95 million, in both long and short positions. The Chaikin Money Flow (CMF), which measures the balance between buying and selling pressure, is beginning to weaken. If it crosses into negative territory, sellers could regain control.

Technical Consolidation or Trend Reversal?

Not all is pessimism. The weighted funding rate recovered to positive territory at 0.0195%, suggesting that long positions are regaining appeal. For optimists, the sharp correction represents a “technical reset” after an overly rapid ascent, not a fundamental reversal.

Zcash faces a critical period. Massive accumulation by spot investors and still-positive technical indicators suggest a temporary consolidation. However, vigilance is essential: if derivatives continue to drain and the CMF turns negative, the 2025 rally could have reached its peak.