Is the rally 'over' now?...Zcash reaches the limit of its parabolic rally after enticing retail investors to chase the price

▲ Zcash (ZEC)/ChatGPT generated image

As the virtual asset market rebounds, driven by geopolitical tailwinds and capital rotation, signs of a trend reversal have been detected in a specific privacy asset that recently showed explosive growth.

According to U.Today, a cryptocurrency specialized media outlet, on May 25 (local time), Zcash (ZEC) surged from the low $300s to near $700 in recent weeks, leading the rally in the privacy virtual asset market. However, a typical shooting star candle pattern has recently appeared on its daily chart, showing signs of slowing buying momentum. This is a warning sign that the strength of buying forces is finally being exhausted after a steep vertical breakout. Zcash strongly pushed up to the $680 region before sellers intervened, leading to repeated price rejections near the peak. The long upper wick seen in recent candles and subsequent weakening momentum indicate that it has entered a distribution phase rather than healthy profit-taking.

Along with price overheating, technical indicators have also begun to turn downwards. The Relative Strength Index (RSI), which had been in the overheated zone for several weeks, is still near the overbought area but has slowly started to decline. This type of indicator setup is typically found near local exhaustion points after a parabolic rise where the price exceeds both organic spot demand and moving averages. However, despite several warning signs, the overall trend remains bullish. The 20-day moving average is rapidly rising near $530, supporting the current price level, and Zcash is trading above all major moving averages. After several months of bearishness, the 50-day and 100-day moving averages have also recently completed their bullish recovery.

A vertical rally is unlikely to sustain indefinitely without a price readjustment process. The burden on the bullish camp is that Zcash's recent growth was largely driven by momentum-chasing rather than steady accumulation. While trading volume surged during the breakout phase, subsequent buying interest began to thin out as the price approached historical resistance levels from previous cycles. Privacy virtual assets have relatively lower liquidity compared to large virtual assets, so sharp reversals often occur once speculative momentum subsides. When traders withdraw funds and continue rotating into other assets, the correction could be much deeper than anticipated.

The key zone currently attracting market attention is between $600 and $620. If buyers fail to defend this area, Zcash's price could quickly fall to the 20-day moving average located near $530. If even that support level breaks, the next significant support cluster is formed between $430 and $450, close to where the past breakout began. As profit-taking pressure from short-term overheating intensifies, whether the key support levels are held will determine the future direction.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*