Zcash price remains under significant pressure as bearish momentum continues to strengthen across the market. Zcash (ZEC), which has fallen nearly 35% since late January, is now deep in a downward channel that has been driving its price down for months.
Weak trading volumes, waning interest in whales and reduced derivatives activity are all adding to the downward trend. The charts now suggest that Zcash may be entering another collapse phase, as multiple indicators are flashing warning signs.
Channel decline and OBV breakdown indicate sustained selling pressure
Zcash has been trading within a clear downward channel since November, characterized by consistent lower highs and lower lows.
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ZEC entered this down range after peaking above $740 and has already experienced one major crash of over 56% within the channel, which is also a breakdown target. Each rally has weakened, indicating that buyers are unable to change momentum.
Structural weakening is identified by tracking buying and selling pressure by adding volume on days when on-balance volume (OBV) rises and subtracting it on days when it falls. An increase in OBV indicates accumulation, and a decrease in OBV indicates distribution.
From early November to late January, Zcash’s OBV formed an uptrend line. This showed that some Zcash buyers are still looking to accumulate even though the price is trading within a descending channel.
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That support finally failed on January 29th. Since this bust, Zcash has already fallen by nearly 36%. This validates the OBV signal and shows that the loss of volume support directly led to a decline in price.
On-chain behavior reinforces this trend. Over the past seven days, Whale’s holdings have declined by approximately 36%, and the number of large wallets has declined towards 8,000. This suggests that large holders are reducing their exposure rather than accumulating it.
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At the same time, foreign exchange balances soared by nearly 160%. Increasing supply on an exchange typically means more tokens are being prepared for sale, increasing immediate selling pressure.
Strait decline, OBV collapse, whale decline, and foreign exchange inflows indicate a persistent distribution. Retail participation has weakened, long-term holders’ exposure has declined, and supply is moving toward sales venues. This combination explains why ZEC continues to struggle to maintain support.
Remaining long positions increase risk and weaken derivatives activity
With spot participation waning, the next question is whether derivatives can drive up prices as they did during past short squeezes.
So far, the data suggests limited support.
Zcash’s open interest peaked at nearly $1.13 billion in December. It is now worth about $395 million, a drop of nearly 65%. This indicates that speculative interest has cooled sharply, with many traders closing their positions and moving to the sidelines.
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When open interest falls this much, it indicates a decline in confidence. There will be less leverage in the system to encourage strong rebounds and fewer traders will be motivated to defend key levels.
At the same time, funding rates have declined since October but remain at a slightly positive level. Aggressive funding means that long positions still dominate, even though overall participation has declined. Simply put, there are fewer active traders, but many of those who remain are still betting on high prices.
This creates a vulnerable setup. If the price falls further, these remaining longs are likely to be liquidated. If a liquidation occurs in a situation of low liquidity, it can cause a rapid decline.
Therefore, even though derivatives no longer have enough “fuel” to fuel large rallies, the existence of exposed long positions still amplifies the risk of failure. Instead of supporting the price, leverage increases the likelihood of accelerating the sell-off.
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Zcash’s main price levels show why the $100 zone remains interesting
Zcash price is still trapped within a descending channel, with a lower trend line continuing to push the price down. The first major support zone is $230.
If the daily close remains below $230, it could trigger a trendline breakdown, although the next support could be near $212.
If $212 fails, the channel projection and Fibonacci extension both point to the $103 area. This zone represents the full downside movement implied by the current structure.
However, recovery remains difficult. For ZEC to regain near-term stability, it must first recover $286. A move above $389 is needed to improve the medium-term structure. A move towards $557 would require a significant recovery in volume, whale accumulation, and derivatives participation, which is unlikely under current conditions.
Unless Zcash falls below $230 and sustains $212, downside risk will dominate. Barring new participation and capital inflows, the chart continues to support a move towards the $100 zone.
