Zcash price rise and fall explained by a 100-year market theory

Zcash price has suffered a harsh reversal in the past few weeks, erasing most of the gains made during its recent bull run that pushed it from below $50 to $742. 

Summary

• Zcash price has crashed from $742 in November to $350 today.
• The rise and fall can be explained by the Wyckoff Theory.
• ZEC price has now moved to the markdown phase, which is characterized by panic selling.

Zcash (ZEC) token was trading at $352 today, Dec. 6, down by 53% from its highest point this year. It is hovering near its lowest level since December 31, with its market capitalization falling from over $11 billion to $5.8 billion today. 

Wyckoff Theory explains the Zcash price rise and fall

To an ordinary person, the recent Zcash price surge and the ongoing freefall were a random event. However, to market technicians, this surge and fall was a long time coming.

The rally happened because of a 100-year-old technical concept known as the Wyckoff Theory. This theory explains how assets emerge from consolidation, rise, and then falls eventually.

The weekly chart shows that the ZEC price went nowhere for over three year. Its tight consolidation meant that it never participated in the mini bull runs that happened in this period. 

Zcash, like other privacy tokens, remained in a tight range because of regulations and the fact that many exchanges delisted it.

Therefore, the Zcash price was in the accumulation phase, which is characterized by sideways movements. It entered the markup phase in September, a move that was sparked by Grayscale’s Zcash fund application. 

Now, the token has entered the distribution and markdown phases. These phases started when the token formed a double-top pattern at $740, leading to panic selling among holders. 

It has now formed the three black crows pattern, which is characterized by three consecutive bearish candles. 

Looking ahead, the token may experience a relief rally now that it has retested the important support at $305, its highest point in November 2021. This may happen ahead of the approval of the Grayscale ZEC ETF by the SEC.

Such a rebound will likely be a dead-cat bounce, which happens when an asset in a freefall experiences a brief rebound and then resumes the downtrend. 

A drop below that support will point to more downside, potentially to the next key support level at $2152, its highest point in March 2022.