• Zcash holds at a crucial support level on Friday after a 2% drop the previous day.
• The derivatives market shows a bearish bias in ZEC as Open Interest and the funding rate drop.
• The technical outlook for ZEC remains bearish, pointing to downside risk below $200.

Zcash (ZEC) trades near $240 at press time on Friday, remaining under downside pressure, which capped gains below $250 the previous day. The reduced demand for privacy coins in the broader cryptocurrency market flags further downside for Zcash. The technical outlook for Zcash remains bearish, putting focus on the $231 support floor. 

Zcash loses retail support and investors’ interest

Artemis data shows that the entire cryptocurrency market is falling over the last 30 days, with privacy coins taking one of the biggest hits, losing 31.4%, next to Ethereum (ETH) losing 32.5%. This suggests that the retail demand for privacy coins remains one of the lowest in the bear market, limiting the rebound chances.

Additionally, Blockworks data shows that the shielded supply in Zcash’s privacy pools, including Sprout, Sapling, and Orchard is saturating above 30%, holding 5.03 million ZEC tokens as of Friday. Additionally, Blockworks data shows that the shielded supply in Zcash’s privacy pools, including Sprout, Sapling, and Orchard, is saturating above 30%, holding 5.03 million ZEC tokens as of Thursday. A stagnation in new inflows into the privacy coin reaffirms the decreasing need for investors to shield their ZEC tokens for financial privacy.

On the derivatives side, the market pressure adds to the bearish bias in Zcash as CoinGlass data shows that ZEC Open Interest (OI) is down 4.61% over the last 24 hours, to $293.21 million. A drop in OI suggests reduced notional value of outstanding contracts due to forced liquidations, reduced investors’ risk appetite, or both. The long liquidations of $832,360 over the same time period outpace short liquidations of $177,670, significantly reducing the bull-side positional buildup evidenced by a long-to-short ratio of 0.9448.

Meanwhile, the funding rate is down to -0.0207%, indicating a bearish bias among traders, willing to pay an additional premium to hold short positions. 

Technical outlook: Will Zcash price drop below $200?

Zcash tests the 38.2% Fibonacci retracement level at $231, measured from the August 20 low of $34.45 to the November 7 high of $750. The privacy coin is moving below the declining 50-day and 200-day Exponential Moving Averages (EMAs), sustaining a broader correction phase from last year’s peak. 

The Moving Average Convergence Divergence (MACD) approaches its signal line as bullish momentum fades, risking a bearish crossover. At the same time, the Relative Strength Index (RSI) at 39 stays below the 50 midline, reinforcing persistent downside pressure without reaching the oversold zone.

If ZEC breaks below $231 on a daily close, it would open doors to the $200 level, targeting the $187 support floor, last tested on February 6. For deeper support, the 50% retracement level lies at $160.

On the upside, a potential rebound from $231 could lift ZEC toward the 200-day EMA at $293, which would serve as dynamic resistance. 

(The technical analysis of this story was written with the help of an AI tool.)