Zcash Bear Trap Active After 15% Rebound: What's Next for ZEC Price?

Zcash has experienced a 15% rebound in price since January 19, rising from a breakdown low near $336 to around $362 according to analysis. The rebound followed a confirmed bearish pattern break, raising concerns about potential bear traps for aggressive short sellers. Despite this move, the Zcash market remains under bearish pressure, with sellers still active near resistance levels.

Whale activity has increased significantly during the recent rebound. Mega whale addresses have added nearly 9% to their holdings over the past week, accumulating about 3,500 ZEC. Standard whale addresses have also increased their ZEC balances by 5%, suggesting ongoing interest in the asset at discounted prices. This accumulation is not a sign of bullish conviction but rather a strategic buy at the dip.

The price action has drawn attention to the 100-day EMA line. ZEC's current position is about 9% below this level. Historically, reclaiming the EMA has led to significant price increases, but this will require a strong push through $386-$395, where resistance remains active.

Why Did This Happen?

Zcash has faced structural weakness in the past week due to leadership and development challenges within the Electric Coin Company. The price dropped from a local high of $528 to a low of $400, highlighting bearish pressure. Despite the dip, large investors have stepped in to accumulate ZEC, suggesting confidence in the asset's long-term value.

The rebound came as market conditions deteriorated for Zcash. A breakdown from a triangle pattern failed to materialize as expected, reversing the bullish momentum and increasing bearish conviction. This shift left the market vulnerable to further downside risk.

How Did Markets React?

On-chain data reveals a surge in whale activity, with one major wallet withdrawing 76,661 ZEC (worth $31.65 million) from Binance. This move indicates a strategic accumulation by large investors during a period of market uncertainty.

Exchange balances increased by 3.4% in the past 24 hours, signaling growing sell-side pressure. Tokens are being moved to exchanges for potential liquidation, a common trend during market corrections.

The Money Flow Index (MFI) shows a bullish divergence, as price trends lower while the MFI rises. This divergence is a sign of dip buying activity, and suggests potential for a short-term bounce.

What Are Analysts Watching Next?

Analysts are closely monitoring key price levels for confirmation of the bear trap scenario. A daily close below $335-$336 would confirm the breakdown pattern and open the door to further downside, potentially targeting the $171 level.

Conversely, a daily close above $386-$395 would mirror a successful EMA reclaim seen in December and could weaken the bearish structure. A push beyond $463 would invalidate the right shoulder of the head-and-shoulders pattern, and a move above $557 would break down the broader bearish thesis.

Derivatives positioning also provides insight. Short liquidations slightly outweigh longs in the next 30 days on Binance ZEC perpetuals. This means even a moderate price push could begin forcing short covering.

Market observers are also watching for signs of macroeconomic influence. Zcash has been affected by broader market conditions, including macro uncertainty and rising interest in decentralized finance (DeFi). The recent volatility is part of a larger narrative of crypto market adjustments and regulatory shifts.

With the Zcash price in a narrow decision zone, the next few weeks will be critical in determining the direction of the asset. The balance between accumulation and distribution will play a key role in shaping the short-term outlook.