A sudden fall of the Zcash #ZEC from a peak of $742 to the lowest levels of the year.
The crypto.news site mentioned in a technical analysis that the price of the digital currency Zcash ZEC has experienced a sharp decline over the past few weeks, wiping out most of the gains it achieved during the recent upward wave that took it from less than $50 to a peak of $742.
Currently, the ZEC token is trading around $347 on December 6, down nearly 53% from its highest point this year, hovering near its lowest level since the end of last year. This decline has led to a contraction in the market value of the coin from over $11 billion to about $5.8 billion currently, in a shocking drop for which analysts are seeking explanations.
Wyckoff theory for understanding the complete price cycle:
According to the site's analysis, a casual observer might see the massive rise in the price of Zcash #ZEC followed by the subsequent crash as random events, but for technical analysts, this trajectory was anticipated within the framework of a century-old technical theory known as the Wyckoff Theory.
This theory explains how assets exit the accumulation phase to enter the bullish phase, then transition to the distribution and finally the decline phase. The weekly chart shows that the price of Zcash #ZEC has remained in a narrow sideways range for over three years, ignoring the mini bull runs seen in the market during that time. Many attribute this stagnation to regulatory factors and the delisting of privacy-focused coins like Zcash ZEC by many exchanges.
Zcash currency #ZEC from accumulation to decline:
The site clarified that according to the Wyckoff theory, such long stagnation of Zcash ZEC represents an accumulation phase, characterized by sideways price movement. The price then entered a bullish phase in September, ignited by the news of Grayscale submitting an ETF application based on Zcash ZEC.
Now, the token has entered the distribution and decline phases, which began when the price formed a double top pattern at $740, leading to panic selling among holders. This decline confirms the formation of the 'three black crows' candlestick pattern on the chart, a strong bearish pattern.
Future predictions for Zcash #ZEC :
The site noted that attention is now turning to the possibility of a short-term recovery rebound, especially after the price tested the important support level at $305, which represents the highest point in November 2021. This rebound may occur before any decision from the U.S. Securities and Exchange Commission (SEC) regarding Grayscale's fund application.
However, analysts warn that any rebound may only be a dead cat bounce, a temporary intermediate rebound during an overall downward trend, followed by a resumption of the decline. If the support level of $305 is broken, it may open the door for further declines towards the next support level at $215. This cycle illustrates the explanatory power of traditional models even in the highly volatile modern digital asset markets.
