Zcash price could crash as Grayscale converts ZEC Trust to ETF

Zcash’s price has lost momentum and crashed by 32% from its year-to-date high, and technicals point to more downside despite major news from Grayscale.

Zcash (ZEC), a top player in the privacy industry, was trading at $503 on Wednesday, Nov. 26, bringing its market capitalization to $8.29 billion from the year-to-date high of $11.4 billion.

Zcash price dropped even as after Grayscale filed the S-3 form that will enable it to convert its trust to an exchange-traded fund. This is an important step as ZCSH will become the first Zcash ETF in the industry.

The trust, which has an expense ratio of 2.50% has close to $200 million in assets under management.

Grayscale has successfully converted several of its trusts into ETFs, including assets such as Bitcoin (BTC), Ripple (XRP), and Solana (SOL).

Converting such a trust into an ETF makes it available to more investors, as its private placement funds are only available to qualified investors.

Zcash’s price has been one of the best-performing in the crypto industry over the past two months. This rally started after Grayscale announced the launch of its ZEC trust.

Since then, data shows that its growth has accelerated, with the number of shielded supply soaring. Data compiled by Zechub shows that supply has jumped to over 4 million from below 3 million a few months ago.

Zcash price technical analysis points to a retreat 

The weekly timeframe chart shows that the ZEC price remained in a tight range between the support at $15 and the resistance at $77 between June 2022 and September this year.

That consolidation is a sign that the coin was in the accumulation phase of the Dow Theory. This phase is characterized by low volume and volatility.

This is followed by the markup phase of the Wyckoff Theory, characterized by soaring demand. It entered the markup phase in late September, when it surged from below $50 to a record high of $742.

Now, there are signs that the Zcash price has moved to the distribution phase of the Dow Theory. This phase is characterized by downward pressure as investors start to book profits. ZEC has also formed a double-top pattern on the daily chart.

Therefore, the most likely scenario is a token crash, potentially to the 50% Fibonacci Retracement level at $380, as investors panic-sell. A move below that level will signal more downside, potentially to the 61.8% retracement at $295.