Important points:
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ZEC’s 500% rise in October was fueled by celebrity endorsements and a short liquidation period.
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The ascending wedge pattern currently warns of a possible 30% correction towards the $260-$270 support zone in November.
Zcash (ZEC) is surprising crypto bears this Halloween, as it was one of the few coins to post a significant rally on Friday.
The privacy-focused cryptocurrency rose 7.75% to around $390.75, its highest level since 2018. In comparison, the market capitalization of the virtual currency market fell by 2.50% during the same period.
ZEC price has increased by nearly 500% in October, contrasting with a 4.50% loss in the crypto market.
What’s behind Zcash’s incredible comeback?
Crypto Celebrity Pump ZEC Price
The high-profile support further fueled ZEC’s bullish narrative.
Zcash’s price began to soar after prominent investor Naval Ravikant called Zcash “insurance against Bitcoin” in an October 1 post. It soared more than 60% that day and has continued its upward momentum ever since.
Mert Mumtaz, co-founder and CEO of Solana-focused developer Helius, publicly set a $1,000 goal, putting Zcash in the spotlight and spurring an influx of momentum traders.
Most recently, BitMEX co-founder Arthur Hayes fueled an uptrend in ZEC with a $10,000 call, leading to a 30% increase in ZEC price.
Related: Expectations for the alt season are high, but there is no sign of it yet
These rallies are similar to what the Dogecoin (DOGE) market experienced in 2021. According to researcher Davian Fablander, meme coins rose an average of 33% following Elon Musk’s positive posts.
ZEC short-term liquidation fuels rally
The short-term liquidation added further fuel to Zcash’s price hike.
According to estimates based on CoinGlass, there has been approximately $65 million in cumulative liquidations in ZEC futures over the past two weeks, with more than half of that amount coming from short positions.
This imbalance suggests that the ZEC breakout was caused by a classic short squeeze, with traders betting on privacy coins forced to close their positions as the price rose.
Retail FOMO is fueling the upside, as evidenced by the spike in internet searches for the keyword “Zcash” throughout October, especially around Pump Day.
The feedback loop of buying triggered by liquidations, combined with persistent FOMO among retail traders, has helped sustain the rally well beyond the initial trigger.
ZEC technical suggests 30% correction
On the daily chart, ZEC has formed an ascending wedge, and this pattern often precedes a bearish reversal after an extended uptrend.
The upper bound of the wedge is currently near $450, suggesting that ZEC could still move higher toward this top before momentum weakens.
However, the bearish divergence between the token’s rising price and falling RSI reading (currently near 74), coupled with declining trading volumes, suggests that purchasing power is waning.
This pattern could support a 30% decline towards the $260-$270 area in November if sellers push ZEC below the lower trendline of the wedge.
The $260-$270 area coincides with the 20-day exponential moving average (20-day EMA, represented by the green wave).
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.