Zcash falls over 20% from record high amid ETF outflows and geopolitics

FUNDAMENTAL OVERVIEW

In the week ending October 2, Grayscale's ZCSH ETF recorded net outflows of roughly $93.6 million, its first negative week since late August. The outflows may have been driven by worsening geopolitical developments in recent weeks and expectations of a Fed rate hike, as most positive Zcash-specific news had already been priced in.

Zcash activated the NU7 upgrade on its public testnet on October 4, slightly ahead of the originally expected October 6 date. The upgrade reduced the target block time from 75 seconds to 25 seconds and introduced a Network Sustainability Mechanism along with new limits for shielded transactions. Developers will evaluate the results and decide on mainnet activation on October 20, with November 5 currently targeted for that activation.

With a light economic calendar, US-Iran developments are likely to be the main focus this week. A breakthrough in negotiations would be positive for Zcash, as it could trigger a further unwinding of aggressive Fed rate hike expectations. Conversely, a prolonged stalemate or a worsening situation could continue to weigh on risk sentiment and cap the broader crypto market.

ZCASH TECHNICAL ANALYSIS – DAILY TIMEFRAME

Zcash broke below the major upward trendline and extended losses as sellers piled in, targeting a drop to the 1,031 level. If the price reaches that point, buyers are expected to step in with defined risk below the level to position for a rally to new highs. Meanwhile, sellers will look for a break lower to extend the decline toward 800.00.

ZCASH TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

A minor upward counter-trendline defines the recent pullback on the four-hour chart. Buyers will likely lean on that trendline with defined risk below it to position for a rally to 1,500. Conversely, sellers will seek a break lower to increase bearish bets toward 1,031.

ZCASH TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

A minor downward trendline defines the current bearish move on the hourly chart into the four-hour trendline. If a bounce occurs at the four-hour trendline, sellers are expected to lean on the downward trendline with defined risk above it to keep targeting new lows. Buyers, on the other hand, will look for a break higher to boost bullish bets toward 1,500.

UPCOMING CATALYSTS

The US ISM Services PMI is due today. On Wednesday, the FOMC meeting minutes will be released. Thursday brings the latest US Jobless Claims data. On Friday, the week concludes with the University of Michigan Consumer Sentiment survey.