Zcash, up 68% in May...hitting a 4-month high and leading the revival of privacy coins?

▲ Zcash (ZEC), Ethereum (ETH), XRP (XRP)/AI generated image

Zcash (ZEC) surged 68% in May, re-emerging as the center of the privacy coin market. With rapidly growing interest from individual investors and open interest in the derivatives market hitting a four-month high, analysis suggests that the short-term rally could lead to a test of the $600 resistance level.

According to FXStreet on May 7 (local time), Zcash maintained its upward trend for eight consecutive days until Thursday, staying above its short-term support level of $570. Zcash has shown a strong rebound since its low of $345 at the end of April, and if the upward trend continues, it is expected to target the psychological resistance level of $600. Surpassing $600 would also narrow the gap to its all-time high of $750 recorded in November last year.

Demand from individual investors was cited as a key factor supporting this rally. Zcash perpetual futures open interest recorded $1.24 billion on Thursday, up from $1.16 billion the previous day. FXStreet reported that this figure is the highest since late December last year. When both price and open interest rise simultaneously, it is interpreted as a sign that traders are increasing their risk exposure and actively opening new long positions.

However, increased leverage also raises short-term risks. FXStreet diagnosed that if Zcash fails to break through key resistance levels, liquidations of highly leveraged positions could occur, potentially leading to a long squeeze and increased selling pressure. The possibility of profit-taking after the sharp rise was also presented as a variable that could put pressure on Zcash's price.

The technical trend still leans towards bullish. Zcash recovered its major exponential moving averages and expanded its gains, with the 50-day EMA at $346, the 100-day EMA at $324, and the 200-day EMA at $300. FXStreet assessed that the current price level significantly exceeds the major EMAs, indicating a clearly established upward trend.

Momentum indicators also point to buying dominance. On the daily chart, the Relative Strength Index (RSI) stood at 86, remaining in overbought territory, and the Moving Average Convergence Divergence (MACD) histogram maintained positive territory. While short-term overheating concerns remain, it is interpreted that buying pressure still holds market dominance. In case of a decline, immediate support is at $570, with $500, $346, $336, $324, and $300 suggested as key demand zones for deeper corrections.

On the upside, $600 is the first hurdle. FXStreet explained that this price level acted as resistance that halted Wednesday's rally. If Zcash successfully breaks $600, it will enter the re-challenge zone for its all-time high of $750. Conversely, if the $570 and $500 support levels falter, overheated leveraged positions and profit-taking volumes could pressure the short-term upward structure.

*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.*