Zcash Price Forecast: ZEC Posts Double-Digit Gains Despite Weak Derivatives Market

Zcash (ZEC) has extended its recovery to over $240 on Friday, rising more than 31% from its intraday low at $185. The recent gains come despite ongoing weakness in the derivatives market, where futures Open Interest has dropped to $335 million from $396 million the previous day.

Traders remain cautious as the decline in OI from a peak of $1.38 billion in November indicates waning confidence in ZEC's ability to sustain an uptrend. For a bullish recovery to hold, OI should increase in tandem with price movements.

Meanwhile, liquidation pressure has eased due to the ongoing price recovery. CoinGlass data shows $3.2 million in longs and $2.4 million in shorts were liquidated on Friday, compared to $9.5 million in longs and $2 million in shorts the prior day.

Why the Move Happened

Zcash's recent gains followed a sharp decline of over 40% since Sunday and 65% from January 1. The token has now posted a relief rally, but the broader trend remains bearish. The Relative Strength Index has risen to 32, indicating that bearish momentum is fading.

However, the Moving Average Convergence Divergence remains below the signal line, signaling ongoing bearish bias. If the negative histogram bars contract, it could suggest investors are becoming more confident in ZEC's upward potential.

How Markets Responded

The area between $230 and $240 is critical for ZEC, as it may absorb selling pressure amid profit-taking. The $185 demand zone remains in play unless the token steadily rises and reclaims the 200-day EMA at $302 as support.

Derivatives activity has remained subdued, with Open Interest declining by nearly 65% from its December peak of $1.13 billion. This drop suggests reduced conviction among traders, with fewer willing to defend key price levels.

Despite the weak Open Interest, positive funding rates indicate that long positions still dominate. However, these longs are vulnerable to further price declines, increasing the risk of additional downward pressure in low-liquidity conditions.

What Analysts Are Watching

Technical indicators point to mixed signals for ZEC. The RSI on the daily chart is rising, suggesting fading bearish momentum. A move closer to the midline could accelerate a shift toward a bullish phase.

Key levels to watch include the 200-day EMA at $302 and the upper descending trendline resistance. If ZEC can move beyond these, it may reinforce the bullish outlook and support a potential recovery to $300.

The token remains vulnerable to further declines if it fails to reclaim these levels. A daily close below $230 would expose the next support near $212, and a breakdown could trigger a move toward the $103 region.

Retail participation and on-chain activity are also under scrutiny. Whale holdings have dropped by 36% over the past seven days, and exchange balances have surged by nearly 160%, indicating increased selling pressure.

Zcash's performance is also being shaped by broader regulatory pressure on privacy coins. The privacy segment is down more than 25% over the past week, with Zcash and Monero leading the decline. The drop reflects fading retail demand and increased liquidation pressure.

Market participants are watching for renewed buying interest and potential regulatory developments. With Zcash trading below $250, a sustained recovery would require stronger volume, whale accumulation, and derivatives participation.