Why ZEC’s 3-Year High Means Trouble

ZEC, one of the market’s leading privacy tokens, has surged to a three-year high. The token has soared 83% in the past 24 hours alone, making it the day’s best performer. Over the past week, it has outperformed other privacy-focused cryptocurrencies with a 150% gain.

However, there is a catch. On-chain signals suggest that ZEC’s rapid climb may be pushing into unsustainable territory, as on-chain data begin to reflect euphoric levels that often precede corrections.

Grayscale Sparks ZEC Frenzy With New Trust

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ZEC’s 83% uptick in the past day follows Grayscale’s launch of its Zcash Trust to eligible accredited investors. The trust offers exposure to the meme asset as a security without having to buy, store, or secure the token directly. 

While this has spurred a significant rise in the demand for ZEC over the past day, pushing its price to a multi-year high, risks abound. 

Market Uncertainty Could Test ZEC’s Rally

One of the clearest warning signs is ZEC’s social dominance, which has skyrocketed to a five-year high. At press time, this stands at 1.21%, per Santiment’s data. 

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This metric measures an asset’s share of online discussions compared to the total conversations around the top 100 cryptocurrencies by market capitalization. 

When it surges, it means that discussions about the asset in question are suddenly a much more significant part of the overall conversations happening in the crypto market compared to before.

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Historically, when an asset’s social dominance climbs to multi-year highs during a rally, it often signals overvaluation. Such spikes suggest the asset is over-hyped and the market is becoming crowded, raising the risk of a ZEC price correction over the next few sessions.

In addition, ZEC’s aggregated funding rate across major exchanges has remained unstable over the past week, fluctuating repeatedly above and below the neutral zero line. 

This indicates that traders have not established a clear directional bias, with long and short positions alternating in dominance.

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Such instability in the derivatives market reflects uncertainty around price sustainability. This suggests that ZEC’s current rally might be driven more by speculative positioning than by consistent bullish conviction. If sentiment shifts, this leaves the token vulnerable to sharp swings.

ZEC Could Plunge Toward $112 If Hype Fades

Without renewed, sustainable demand to back the price action, ZEC’s price risks retracing some of its recent gains. Once the market hype wanes, the altcoin risks plunging towards the support at $134.48. If this price floor gives way, ZEC could fall deeper toward $112.72. 

However, if the current bullish momentum holds, ZEC could extend its run above $161.35.