Zcash is trying to recover accumulated losses after the sharp decline it experienced in November.
After the recent 40% rally, optimism has returned to the market. However, some fundamental indicators suggest that ZEC may still struggle for a sustained recovery.
Zcash is Not Following Bitcoin
The Relative Strength Index (RSI) shows that as Zcash gains momentum, bullish investor sentiment is strengthening. The indicator has risen above the neutral level of 50.0 for the first time in nearly two weeks, indicating increased confidence in the market. This level is typically observed in the early stages of trend reversals and may support ZEC's upward movement.
However, the recent rise in the RSI alone does not guarantee a complete recovery. The broader cryptocurrency market remains sensitive to macroeconomic signals. Even small changes in investor sentiment can impact ZEC's momentum. Therefore, a continuous upward pressure is needed to prevent the current rally from fading too early.
Zcash's correlation with Bitcoin is currently at -0.47. This indicates an inverse relationship between the two assets and corresponds to a period when Bitcoin is showing signs of recovery. This divergence poses a risk for ZEC. If Bitcoin continues to rise, the negative correlation may limit ZEC's potential while the overall market strengthens, potentially leading to resistance.
On the other hand, if Bitcoin loses momentum or experiences a downturn, ZEC could continue its rally on its own due to the negative correlation. This dynamic creates uncertainty: ZEC's direction will largely depend on Bitcoin's next major move.
At the time of writing this article, the price of ZEC is at $439 and trading just below the critical resistance of $442. Although the recent 40.5% increase is notable, it fails to compensate for the 55% collapse experienced in November.
For a genuine recovery, Zcash needs to gain nearly 59% in the coming days to reach $700. In the short term, if closures above $442 turn this level into support, it could open the door for the price to rise to $520.
If the negative correlation trend with Bitcoin reverses, ZEC could drop back to $403, or even as low as $340. This would erase a significant portion of the recent rally and invalidate the bullish outlook.
