Key Points
- Zcash fell below $1,000 after a violent sell-off
- Grayscale commits to investing $1 million to support the Zcash ecosystem
- Despite network upgrades, the outflow of funds and margin calls from ETF still pose pressure on ZEC.
Zcash ( ZEC ) has fallen below $1,000. Just one day after Grayscale announced its commitment to invest $1 million in support of this privacy-focused blockchain, the sharp decline of this cryptocurrency continues.
On November 11th, the trading price of ZEC approached $990, but it fell by about 13.5% within 24 hours, reaching as low as $960.56 at one point during the session. Over the past 7 days, this cryptocurrency has seen a cumulative decline of over 23%, and the momentum that previously drove the rise in privacy coins has significantly diminished.
Despite Grayscale promising to invest $1 million, Zcash still fell below $1,000.
According to the announcement on November 10th from Grayscale, this asset management company launched Zcash Invest, which is a platform designed to introduce this cryptocurrency and its exchange-traded fund ZCSH to investors.
Grayscale commits to investing $1 million in non-profit organizations and related initiatives that support Zcash, of which $400,000 has already been allocated to four groups.
Zcash Foundation, Pretty Good Policy, for, Zcash, Shielded Labs, and Project Tachyon each received $100,000.
Grayscale also announced the launch of a nationwide advertising campaign and plans to reinvest funds equivalent to up to one year's worth of the founder fees of ZCSH into development, marketing, and education.
This initiative expands the company's support for the Zcash ecosystem, but this funding does not represent a direct purchase of ZEC worth one million US dollars.
Therefore, this announcement will not automatically create buying pressure in the cryptocurrency market.
Zcash ETF Capital outflows and margin calls put further pressure on the situation
The demand for institutional investment products is also weakening.
It is reported that the ZCSH fund of Grayscale recorded a net outflow of over $15 million from November 1st to November 9th, following an outflow of approximately $46.25 million in October.
The latest round of weakness continued the previous selling pressure on the altcoin ETF; at that time, ZCSH saw nearly $11 million in outflows within a single trading day.
Meanwhile, a derivatives snapshot on November 11 showed that ZEC futures experienced a margin call of approximately $40.63 million within 24 hours, of which long positions accounted for $35.35 million.
Unclosed futures contracts decreased by nearly 10% to about $2.24 billion, indicating that traders are closing their positions as prices weaken.
However, although a margin call can amplify fluctuations, these data do not explain the initial cause of the selling pressure.
The decline of ZCSH also contrasts with September, when, against a backdrop of stronger investor interest, the fund's assets once approached $1 billion.
Zcash can it rebound after the upgrade to NU7?
Zcash has recently weakened, occurring after the activation of Network Upgrade on November 6th. This upgrade reduces the target block time from 75 seconds to 25 seconds.
This upgrade brings faster transaction confirmation times and introduces a mechanism designed to enhance the long-term sustainability of the network.
Despite some improvements at the technical level, ZEC still finds it difficult to maintain its upward trend from before the upgrade.
Currently, the $1,000 level represents an important psychological resistance; if it can be maintained above $1,050, it may improve short-term market sentiment.
On the downside, if selling continues, the market may focus on $950, followed by $900. However, it is noted in the text that these are merely conditional scenarios and not confirmed target levels.
The privacy-oriented cryptocurrency market remains sensitive to changes in risk appetite, especially after inflation in the United States exceeded expectations, reigniting concerns in the market about the Federal Reserve's further tightening of policies.
