Zcash Price Forecast: Can ZEC Hold $1,000 Support as Hot US CPI Data Counters Grayscale’s Marketing?

• Selling pressure drags Zcash towards $1,000 on Wednesday as losses extend into a fifth straight day.
• Investor appetite for high-risk assets weakens as hot US CPI data raises the likelihood of Fed rate hikes.
• Alongside a major Zcash advertising push, Grayscale channels sponsor fees into the network's development, marketing, community and education.

Sustained selling has pushed Zcash (ZEC) close to $1,000 on Wednesday, with cumulative losses exceeding 20% over the past five days. Weighing on sentiment, stronger-than-expected US monthly inflation figures have outweighed support from Grayscale’s Zcash marketing campaign and its contribution of sponsor fees to the network.

With downward momentum gathering pace, Zcash’s technical outlook remains bearish, putting a key moving average near $880 in focus.

How is US inflation weighing on the crypto market?

Inflation worries intensified after Tuesday’s US Consumer Price Index (CPI) release showed a 0.4% increase in October, exceeding the market forecast of 0.3%. Coming after September’s 0.6% rise, the reading also increased the likelihood of a US rate hike.

According to the CME FedWatch Tool, the probability of the Fed raising rates by 25 basis points (bps) at its December 9 meeting stands at 90%, reducing liquidity in high-risk assets. The crypto market has borne the brunt: as previously reported by FXStreet, liquidations exceeded $700 million over the last 24 hours, with long positions accounting for nearly $580 million.

While Bitcoin (BTC) dropped below $74,000, Tuesday’s 10% decline in Zcash left it vulnerable to further losses below $1,000. The fall in ZEC outweighed the potential benefits of Grayscale’s front-page marketing campaign in the Wall Street Journal and its allocation of sponsor fees to Zcash’s network development, marketing, community and education.

The correction nevertheless suggests that markets are factoring in the possibility of a 25 bps rate hike. Once that occurs, crypto prices could stabilise or even recover.

Why have Zcash derivatives turned bearish?

As investor fears peak, selling dominates the crypto derivatives market. CoinMarketCap’s Fear and Greed Index has fallen to 26 on Wednesday from 42 last week, signalling a sustained deterioration in risk appetite following the Democratic Party’s victory in last week’s US midterm elections and, more recently, mounting inflation concerns.

Zcash’s futures taker buy-to-sell ratio has slipped below 1 to 0.95 on Wednesday, according to CoinGlass. This suggests that incoming market orders are immediately consuming resting bids. As the wider crypto market retreats, diminishing buy-side liquidity points to downward pressure and suggests panic selling.

Technical outlook: Can Zcash defend $1,000?

At the time of writing on Wednesday, Zcash is trading 3% lower, extending its steep five-day slide. The privacy coin’s correction has taken it below the 50-day Exponential Moving Average (EMA) of $1,202 and closer to the longer-term 200-day EMA at $880.

Tuesday’s 10% decline confirmed a bearish break from the consolidation range defined by the October 8 high of $1,340 and low of $1,112. Zcash also closed below horizontal support at $1,050, which had underpinned its October 18 rebound, clearing the way for a move towards the 200-day EMA at $880.

Daily-chart indicators favour further downside. The Moving Average Convergence Divergence (MACD) is moving below zero with an expanding negative histogram, while sustained selling pressure has pulled the Relative Strength Index (RSI) down to 36.

To reduce near-term bearish pressure, Zcash needs to regain former support levels near $1,050 and $1,112, which now act as resistance. Such a recovery would reopen the route to the 50-day EMA at $1,202.

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