Zcash soared 51% in a week, Grayscale ETF drove surge in demand

Zcash (ZEC) surged 51% in a week, Grayscale ETF triggered a surge in demand

Zcash (ZEC) recorded significant gains in the past week, trading at nearly US$1,244 on September 10, a surge of 51%. The rise was mainly driven by a surge in interest sparked by Grayscale's recently launched Zcash exchange-traded fund (ETF), which has sucked huge amounts of ZECs from the market.

ETF issuance triggers new demand

According to CoinGecko data, ZEC has risen 60.3% in 14 days and surged 153% in the past month. The token climbed from about $814 on September 3 to more than $1,200 in three days, and despite a small correction during the period, it managed to maintain most of the gains.

Much of this momentum is due to Grayscale's Zcash ETF, which began trading on the New York Stock Exchange's Apache sector on August 25. As of September 8, the assets under management of the ETF with the trading code ZCSH reached US$532.9 million, holding 464,514.86 ZECs. The fund's assets exceeded US$500 million within two weeks of its launch, reflecting strong investment demand.

Grayscale, a well-known asset manager focusing on digital currencies, reported that since the fund's establishment, cumulative inflows have exceeded US$70 million. On the same day, ZCSH options also began trading on NYSE Arca, which could further increase market activity around the fund.

Part of the fund's assets are provided by DCG International Investments, a branch of Digital Group (DCG) and one of the major investors in the cryptocurrency space. Recent U.S. Securities and Exchange Commission (SEC) filings show that DCG contributed nearly US$100 million worth of ZCSH shares by authorizing participants to deposit 85,705.33 ZECs.

Noun Explanation: Grayscale is a leading digital asset management company known for its investment products for institutional and individual investors seeking to access the cryptocurrency market through traditional financial products, including exchange-traded funds (ETFs) and trust funds.

Zcash positions held by large entities are not limited to ZCSH. According to reports, digital asset company Cypherpunk Technologies held 323,394.38 ZECs as of August 18, accounting for approximately 1.92% of ZECs circulating supply. The company increased its exposure in August through a $33.33 million equity arrangement with Winklevoss Capital.

The deal allows Cypherpunk to establish a U.S. based mining business with Equihash computing power of 4.2 gigahertz per second (GSol/s), accounting for approximately 18% of the Zcash network's final power (at launch). Cypherpunk has set a long-term goal of holding 5% of Zcash supply and notes that approximately 43,800 ZECs are distributed to miners each month.

Noun explanation: Equihash is a proof-of-work algorithm specifically designed to efficiently mine privacy-protecting cryptocurrencies such as Zcash. It resists dedicated mining hardware and promotes decentralized network participation.

Short liquidation accelerates rebound

According to Sharpe Terminal, short liquidations exacerbated the early stages of the rally. On September 4, the short clearing amount reached US$13.51 million and rose to US$27.98 million on September 6. These forced liquidations forced traders to buy to cover ZEC when prices broke through the $1,000 and subsequent $1,200 mark.

ZEC Price Analysis and Technical Outlook

ZEC has recently remained near US$1,240 on the daily chart, with an intraday high reaching US$1,256.80. Prices have remained above $1,100 since the latest breakthrough and are currently testing a resistance zone between $1,250 and $1,280 that has previously prevented upward attempts.

Technical indicators show bullish momentum. The 20-day exponential moving average (EMA) is US$963.65, while the 50-day, 100-day and 200-day EMA are US$766.59, US$639.54 and US$526.63 respectively. All moving averages are rising, with short-term moving averages above long-term moving averages, and ZEC trading above all indicators.

The distance between the current price and the 20th EMA is close to US$280, indicating a significant deviation from recent short-term trends and a possible correction if buying momentum weakens.

The parabolic SAR indicator remains at US$917.58 below the ZEC, supporting the current upward trend and has not yet signaled a reversal. A close above $1,280 could push prices further towards $1,400, which has become a psychological target, about 21% above current levels.

On the 4-hour chart, the ZEC consolidated near highs, with the Aroon Up indicator at 71.43%, and the Aroon Down indicator at 0%. This gap shows continued bullish momentum, although recent sideways movements have somewhat tempered upward momentum.

If ZEC can break through US$1,280 with new momentum, it may hit a new high. However, a break below the $1,200 and $1,150 support levels could weaken the price structure. The Energy Wave Indicator (OBV) remains high at around 2.49 million, indicating strong cumulative buying interest, but the decline in OBV may point to increased selling pressure during the consolidation phase.

For bulls, a daily close of $1,280 is a key short-term level; failure to hold $1,150 may lead to asset retesting of $1,100 or even $1,000, and technical support will be near the rising 20-day EMA.