Zcash whale’s exit signals fear – Can ZEC bulls defend $400?

Zcash’s [ZEC] attempted rebound collapsed at $543 four days ago. Since then, the altcoin has traded within a steep downtrend, closing at lower lows. 

As a result, ZEC dropped to a low of $440 before slightly bouncing back. As of this writing, Zcash traded at $447, down 2.43% on the daily charts. 

With the altcoin showing extended weakness, whales are turning bearish and closing their positions. 

Zcash whale takes profit amid rising liquidation risk

As ZEC continued to decline, leveraged positions have faced massive liquidations. In fact, longs worth over $17 million have been liquidated over the past three days. 

With price falling below $450, over $6.5 million worth of longs were liquidated in the past 24 hours. 

Amid these rising liquidation levels, traders, especially whales, have been forced to exit their positions. One such whale was Garret Jin, according to Lookonchain. 

As the market decline continued, Garrett Jin closed his ZEC long for a $417K profit. Just a week ago, as the market was declining, the whale took $11.4 million in profit in a short trade. 

JIN’s decision to cash out showed skepticism and a lack of market confidence, possibly anticipating prolonged weakness. 

Interestingly, Jin is not the only trader bearish amid the prevailing market conditions. In fact, the demand for shorts has surged significantly.

According to Coinalyze data, Zcash’s Long/Short Ratio dropped to 0.86, with shorts accounting for 53.6% compared to 46% longs. When short positions outpace longs, it suggests that most traders were bearish and anticipated the market would continue to drop.

Is $400 support at risk?

With traders flipping bearish, short demand has not sparked any significant buying. On the contrary, liquidation levels and other market exits have strengthened downside risk, with bears still in control.

In fact, the altcoin’s Relative Strength Index (RSI) made a bearish crossover and fell deeper into the bearish zone, dropping to 45. The drop suggested that sellers have taken significant control of the market.

At the same time, Zcash’s Aroon Line further showed the market’s weakness. Aroon Down jumped to 71 while the Aroon Up dropped to 0.

Such a setup suggests that downside momentum is strong and has significantly outpaced upside momentum. Often, such market conditions precede further losses.

Therefore, if the prevailing market conditions persist, ZEC is likely to drop below $400 again. However, the rising demand for shorts could be a blessing.

If demand sparks significant buying and drives gains, we could see a short squeeze, leading to a trend reversal.

Final Summary

• Garret Jin closed his Zcash long position, taking $417k in profit amid an extended decline.
• ZEC dropped 2%, falling to a low of $440, with bears eyeing a drop below $400 again.