- ZEC, the native token of privacy protocol ZCash, could be an investment opportunity for several fundamental reasons.
- The bullish pointers include an upcoming upgrade, and a heightened demand for privacy cryptos.
- However, technical indicators point towards a looming decline.
YEREVAN (CoinChapter.com) – ZCash (ZEC), a privacy-protecting protocol, traded at over $173 in the European session on Mar. 21. The crypto might be a good investment opportunity ahead of April 2022, and there are several reasons to back the bullish outlook, along with warnings from technical indicators.
Several Bullish pointers for ZCash
#1 ZCash Protocol upgrade
A significant protocol upgrade dubbed NU5 will launch on ZCash in Mud-April. According to the announcement, it will implement the first shielded pool on Zcash that will no longer require a trusted setup. Further improvements will include Unified Addresses, a “future-proof Zcash address format” that claims to improve usability, increase interoperability, and support “shielding Zcash by default.”
Additionally, Electric Coin Co. (ECC), behind ZCash, will release Halo Arc, a product suite that includes the ECC Reference Wallet apps and the ECC wallet SDKs.
As Zcash development decentralizes, the broader Zcash community will benefit from a greater diversity of products. […] By emphasizing products as well as the underlying protocol, ECC can package and promote compatible software across the Zcash technology stack, from protocol to wallets.specified the announcement.
In short, the April upgrade will enhance privacy and scalability on the Zcash network through recursive cryptography, proof aggregation, and blockchain succinctness. Thus, it could boost the demand for the coin and subsequently raise its token price.
#2 High demand for privacy coins amid the war in Ukraine
As CoinChapter previously reported, Russia’s ongoing military invasion might have raised the regional demand for privacy tokens, such as ZCash and Monero. In detail, ZEC rallied almost 74% since the war started on Feb. 24.
The rally prompted the crypto community to speculate on what could have caused the value to soar on Binance sharply. Many concluded that Russian users might be doubling down, trying to avoid the monetary sanctions put in place over the invasion of Ukraine.
Additionally, Monero and Zcash, unlike Bitcoin or Ether, use a cryptographic process to ensure that transactions cannot be linked to wallet holders and are untraceable. Thus, it can be useful for Russian “oligarchs” and ordinary citizens, who were cut off from global finance.
The severe sanctions, coupled with the uncertainty of their duration, might push privacy token demand even higher.
#3 Bullish Sentiment reading
On Mar. 20, online financial technology company Investor Observer reported a bullish reading on ZCash. As a result, the crypto was up 3.56% to $176.57, while the broader crypto market was down 0.03%.
The Investors Observer Sentiment Score measured the performance of Zcash over the past five days by volume and price movement. The reading was bullish, meaning the platform gave ZEC a low-risk rank.
Also read: Bitcoin rallies over $41K after Fed raises interest rates — but a BTC selloff appears likely.
In detail, a big move in Zcash is met with a lot of dollars flowing into, or out of, the cryptocurrency. Thus, low-risk cryptocurrencies are unlikely to have their prices manipulated, making them more attractive for retail investors.
Will ZEC decline after all?
The ZEC/USD exchange rate has more than doubled since Jan. 2022. However, several technical indicators point to a looming decline. In detail, the token formed a bearish Descending Triangle, best visible on a weekly chart, presented below.
The said formation consists of a falling resistance trendline that capped ZEC’s upside attempts since mid-may 2021. Additionally, the pattern features a flat resistance-turned-support line, instrumental for over two years.
If the Descending Triangle’s forecast plays out, the ZCash token could rise to approximately $200, retest the resistance, and tumble below the flat support.
Furthermore, the declining trading volumes (vertical bars at the bottom) back the bearish outlook. IF ZEC bulls want to see the rally continue, they might have to double down and put more weight behind it.
All the fundamental factors listed above the point at a possible bullish continuation. However, the bearish technicals might also have merit.