Zcash was in the $1400 range on Wednesday. After a recent selloff, buyers were attempting to find support. According to a 24 hour price feed from September 30th, ZEC was trading for $1,394.96, a 4.03% decrease from the previous price feed, and a 8.35% decrease over the last 7 days. Sellers remain in control, and traders are waiting to see if there is any buy side pressure to step in and absorb selling pressure.
ZEC Support and Resistance in Focus
In the short term, resistance is expected at $1,425, $1,494, and $1,593. Support is expected at $1,296 and $1,254. The MACD was negative and the RSI was at 41.
Based on these indicators, a decline can be expected. In order to confirm a change in trend, the RSI needs to fall below 30.
Based on the recent trading price, a 7.1% decline would bring the price to $1,296. A more significant 10.1% decline would bring the price to $1,254.
A decline to these prices seems possible. For a trend change to occur, a resistance level needs to be broken. This can only be temporarily achieved with a large buy wall.
Derivatives Activity Raises Volatility Risk
The data provided by Zcash shows that there was a great deal of activity in the futures and spot markets.
- Futures volume reached $8.92 billion. This indicates that there was a great deal of activity in derived assets that were under commodity futures.
- There was $722.01 million trading volume in the spot market, which shows much lesser activity in spot markets.
- The open interest was at $2.81 billion. This means that there were 2.81 billion futures contracts that were still open.\
There was also a liquidation of $28.48 million worth of futures contracts. This data was provided by Coinglass.
There was 12.4 times more volume in futures contracts compared to spot contracts. This shows how active the derivatives market was, but it doesn’t show the direction of the market (bullish or bearish).
Likewise, liquidations and open interest do not necessarily indicate if the market has reached a bottom or top.
Zcash ETF Split Does Not Create Value
According to the data, on Monday $8.12 million worth of ZCSH was redeemed. On Tuesday, there was no net purchase activity. Historical data shows that two day periods do not accurately reflect a trend in investor demand.
The Zcash ETF also announced a share split, in which the issuer will decrease share price by issuing more shares. According to the issuer, the share split will not affect the value of the shareholders’ investment.
Share prices can be reduced by issuing more shares. For example, if a share is worth $120 and is then split into three shares, each share would be worth $40. Share splits do not increase the value of the fund’s holdings or generate a return for the investors of the fund.
Conclusion
The value of investor demand for Zcash is typically low, and recent outflows combined with recent pricing and derivatives risks increases concern regarding the long term outlook for the ETF. Share splits do not and will not change value.
Arslan Ali Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
