Key Takeaways

Why did ZEC decline despite strong retail activity?

A $236.6M outflow from derivatives and falling Open Interest added heavy selling pressure.

Are there signs of a potential rebound?

Yes—MFI shows rising inflows and Funding Rates turned positive, hinting that the pullback may be temporary.

Zcash, the leading privacy token by market capitalization, recorded one of the most significant losses as the broader crypto market slipped below the $2.9 trillion mark.

The asset posted a 24% daily drop, suggesting strong exhaustion in the market. However, AMBCrypto’s analysis indicates that more is happening beneath the surface.

Spot investors step in

Historically, sharp declines in Zcash [ZEC] have often signaled investor exhaustion. This time, however, spot retail investors appear to be driving a new dynamic.

Based on off-chain data from CoinGlass, investors continued to accumulate ZEC despite the ongoing decline.

Total spot accumulation reached $72 million, a sizeable figure that often implies growing bullish sentiment, with many viewing the pullback as an opportunity to buy at a discount.

Source: CoinGlass

When an asset is perceived as undervalued, it typically suggests room for further price growth in the market. In ZEC’s case, this could add to its more than 1,000% year-to-date gain.

Bulls should remain cautious

Technical indicators still present a bullish structure for ZEC, but warning signs are beginning to surface.

The Money Flow Index (MFI) indicates capital inflows into the market, as the indicator continues to rise while holding above the bullish 50 level.

Historically, this kind of positive signal has often preceded a broader market rebound, pointing to a key demand zone between $507 and $440.

Source: TradingView

On the other hand, the Chaikin Money Flow (CMF), which measures whether buying or selling pressure is dominating, shows that selling volume is starting to creep in.

The declining CMF suggests that if the indicator drops below the neutral 0.00 level and into negative territory, bears could take control, forcing ZEC to exchange hands at lower prices.

Where is the selling pressure coming from?

Most of the recent downside pressure has been driven by derivative market activity over the past 24 hours.

Source: CoinGlass

This decline followed a $236.6 million outflow from the derivatives market, with Open Interest falling to $861.5 million at the time of writing.

Such movements typically reflect growing uncertainty among traders, as they brace for increased volatility in ZEC.

This uncertainty has affected both long and short traders, resulting in $32.95 million in forced liquidations during the same period.

Notably, the Open Interest–weighted Funding Rate has turned positive, registering 0.0195%.

This shift suggests that a potential rebound may be approaching and that the recent pullback could represent only a brief phase in ZEC’s overall market movement.

Source: CoinGlass