Zcash (ZEC) is attempting to recover from more than half of the valuation loss due to a sharp decline in November.
Recently, a 40% increase has brought optimism back to the market. However, several fundamental factors suggest that Zcash may still struggle to achieve a meaningful recovery.
Zcash does not follow the flow of Bitcoin
RSI indicates that bullish sentiment is strengthening as Zcash begins to show signs of recovery. This metric has exceeded the neutral line of 50.0 for the first time in about two weeks. This suggests that market confidence is improving. When the RSI enters the positive range, it can serve as an early signal for a trend reversal, and this aspect may support the continuation of Zcash's upward trend.
However, the recent increase in RSI does not guarantee a complete recovery. The overall market remains sensitive to macroeconomic variables. Even a slight change in sentiment could impact Zcash momentum. For the current rally not to end prematurely, sustained and strong buying pressure is needed.
Zcash currently shows a correlation of -0.47 with Bitcoin. This indicates a negative correlation, even as BTC shows signs of recovery. Such a divergence could be a risk factor for Zcash. If Bitcoin continues to rise, Zcash may face limitations on further gains despite a bullish overall market.
On the other hand, if Bitcoin loses strength or declines, this negative correlation could actually bolster Zcash's rally. Due to this dynamic, Zcash's future movements will heavily depend on Bitcoin's major direction.
Currently, Zcash is trading at $439. This price is just below the key resistance level of $442. The recent 40.5% uptrend is noteworthy, but it is insufficient to recover the 55% drop in November.
For a true recovery, Zcash needs to rise by about 59% over the next few days to reach $700. In the short term, if it breaks above $442 and turns it into a support level, additional gains up to $520 are also possible.
If the negative correlation with Bitcoin acts as a headwind, the Zcash price could drop to $403. Furthermore, there is a possibility of it falling to $340. In this case, a significant portion of the recent gains would be erased, and the bullish outlook could be invalidated.
