Zcash Price Forecast: ZEC extends rally as demand for privacy protocols surges

ZCash breaks out as Ethereum Foundation reaffirms commitment to privacy

In a world where almost everything happens on the internet, the Ethereum Foundation (EF) believes that “privacy is the freedom to choose what you share, when you share it, and who you share it with.”

In a blog post highlighted by ZCash on X, the EF emphasized its commitment to privacy as a core part of building trust.

“Privacy deserves to be a first-class property of the Ethereum ecosystem, and we are committed to working alongside the ecosystem to make that a reality for individuals and institutions alike,” the Ethereum Foundation stated.

ZCash is the second-largest privacy-oriented protocol, with a market capitalisation of $3.1 billion. According to CoinGecko, ZEC has pulled more than $840 million in trading volume over the past 24 hours, indicating the growing demand for the token.

The futures Open Interest, referring to the notional value of outstanding futures contracts, surged, reaching $237 million on Thursday and underscoring increasing retail demand for ZEC.

CoinGlass data shows that OI averaged $37 million on October 1, marking an 84% increase in less than ten days. A steady uptrend in the OI would mean that traders are increasingly piling into long positions, anticipating a sustained rally in the coming days.

ZEC/USDT daily chart

Technical outlook: Zcash bulls tighten grip

Zcash offers bullish signals at the time of writing on Thursday, reflecting growing retail interest and bullish momentum. Key indicators, including the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD), support the short-term bullish outlook.

The RSI, currently rising at 72, indicates that bullish momentum is building. Similarly, investors would be inclined to increase risk exposure, if the MACD indicator maintains a buy signal with the blue line remaining above the red signal line.

ZEC/USDT daily chart

Bulls anticipate a breakout above the $200 level in upcoming sessions. However, traders should be cautiously optimistic to avoid sudden pullbacks, especially with the RSI in overbought territory. Still, dips could provide new entry opportunities, especially if demand for privacy tokens and positive sentiment prevail.

Open Interest, funding rate FAQs

How does Open Interest affect cryptocurrency prices?

Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.

How does Funding rates affect cryptocurrency prices?

Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.