ZEC has surged more than 10 times in over a month since late September, and it has now entered the top 20 in the cryptocurrency market capitalization. As a coin that has some concept support but has experienced such an unhealthy short-term surge, a sharp drop is almost inevitable. However, before the crash, it's still possible that the coin could continue to blow up the bears. Is now a good time to short sell?

ZEC Fundamental Analysis

It's hard to say there are many fundamentals for ZEC. After all, coins with fundamentals would not have a valuation difference of 20 times in two months, especially in a low liquidity environment.

Still, we can make a basic introduction. Zcash (ZEC) is a blockchain system based on modified Bitcoin code, and it is the first blockchain system to use zero-knowledge proof mechanisms, providing complete payment privacy.

Its transactions automatically hide the sender, recipient, and amount of all transactions on the blockchain, and only those who have the view key can see the transaction content. Users have full control and can choose to provide the view key to others. The core is privacy protection.

The main people promoting this rise are Naval, Arthur Hayes, and later, Wall Street.

Subjective analysis of where ZEC's top might be

Predicting the top of a speculative coin is always high risk. Therefore, no matter how reasonable the following analysis may seem, individuals should also manage their risks;

1. Market Capitalization Benchmark

Currently, ZEC's market capitalization has reached over $8 billion, with a fully diluted market capitalization of over $10 billion. It ranks 17th among the top 20, which means it has already become a mainstream leading coin. Currently, the top 20 mainly consists of major public chains and a few stablecoins.

If it increases by 20%, reaching $9.6 billion, it can surpass BCH and rank 13th in the cryptocurrency market capitalization rankings. I believe this position is close to the limit of ZEC's market capitalization, because at this point, apart from the unshakable leaders like BTC, ETH, BNB, XRP, SOL, the rest are TRX, DOGE, ADA, HYPE, LINK. It is difficult to find any of them with a logic of exceeding these market capitalizations. Therefore, from the perspective of market capitalization, a price above 600 is considered a very high FOMO emotional level.

2. Market Sentiment

24-hour trading volume is $1.6 billion, ranking 7th on Binance's trading list. If it reaches 3rd, second only to BTC and ETH, it would be a clear signal of a top. The current sentiment is not enough to support a clear top signal. According to Google search trends, it hasn't exceeded previous highs yet, so it cannot be used as a basis for shorting or predicting a top.

3. Funding Rate

The funding rate has already risen to -0.5%. In recent days, it has been rising from -0.1% to higher. Previously, the highest point in October was -0.9%. From the perspective of funding rate divergence, there may be a top signal.

4. Market Rhythm Switch

Currently, it's undoubtedly a small bear market rhythm. All altcoins' rises are not sustained, just rebounds after bottom oversold, then continued to decline. Until this situation changes, it will be difficult to start a new round of trend. Currently, ZEC continues to rise sharply, attracting funds, raising attention, showing signs of a final harvest, and fitting the node of market rhythm switching. After the final surge, it will fall and lead the market down, completing the risk clearance.

ZEC Market Analysis

Looking at the K-line chart, it has set a new historical high, with no resistance above.

Looking at the indicators, there is currently no clear top signal.

However, in recent days, the daily chart showed a top volume increase between 380-480, and after this volume increase, a top signal began to appear. Whether it accelerates upwards or shows weakness, it will constitute the main force's selling behavior.

Overall, there is still upward momentum, but it has reached a very high-risk area. It is definitely not advisable to chase the high. Shorting should be cautious about the last wave of acceleration, and can only be done within 1x, using a dollar-cost averaging approach, and preparing for extreme scenarios between 520-700. If not liquidated, this range will become the top for a long time. Even if it breaks through, it will only continue to fall in the future.

(Personal subjective opinion, not investment advice)

Author: Aaron, ChainThink