Zcash traders face $44 million liquidation risk amid bearish divergence

Zcash (ZEC), the privacy-focused cryptocurrency developed by the Electric Coin Company, recently experienced heightened volatility after an aggressive rally nearly doubled its price and brought it close to the $1,700 mark. The surge, however, was followed by a sharp reversal, with ZEC slipping below $1,500 on Wednesday.

Market turbulence exposes leveraged long positions

By Thursday, ZEC was trading near $1,500. The price drop exposed leveraged long positions to increased risk, particularly those accumulated at lower levels. According to data from CoinGlass, more than $12 million worth of long positions were liquidated after ZEC fell below $1,488 on Wednesday.

A three-month liquidation heatmap from CoinGlass for Binance’s ZEC/USDT futures pair highlights approximately $44.4 million in cumulative long-liquidation leverage below the $1,488 level. Notably, around $1.62 million of this total was concentrated right at $1,488.

Liquidation heatmaps use available exchange data to identify price zones where leveraged positions may be forced to close. While these figures are only estimates, the data reveals a significant imbalance: potential long liquidations below the current price outweigh short-liquidation clusters above it.

Mini dictionary: Liquidation heatmap – A graphical tool that visualizes price levels where leveraged positions may be liquidated, helping traders assess risk concentrations in derivatives markets.

Despite the price recovery above $1,500, Zcash’s fast appreciation has led traders to increase bullish leverage, which could heighten market fragility. If ZEC revisits densely populated liquidation areas, cascading forced selloffs could drive further volatility.

Zcash’s leveraged positioning suggests the downside risk currently exceeds upside squeeze potential, as forced liquidations below $1,488 could force rapid market moves if triggered.

Limited short exposure above current levels indicates any further upside may receive less support from forced buying, while an accelerated decline could follow if liquidation clusters are reached. However, sizable liquidation exposure does not guarantee a directional move. These clusters can remain untouched if spot buying holds prices, or traders can proactively manage risk by adding collateral or closing positions early.

Technical indicators signal loss of momentum

In addition to derivative market imbalances, technical signals are beginning to flash caution. Zcash’s daily chart shows a bearish divergence between rising price highs—especially above $1,650 this week—and a declining Relative Strength Index (RSI), which recently failed to exceed its previous high.

A bearish divergence typically forms when an asset’s price makes higher highs, but its momentum indicator, such as the RSI, fails to do the same. This pattern indicates that each new price peak is supported by diminishing buying momentum.

While the trend does not confirm an immediate reversal, it does increase the probability of a pullback, especially with the RSI hovering near 65, just below the overbought threshold.

ZEC’s rapid advance has left it stretched, and a cooling period might follow even if the broader uptrend remains intact.

If ZEC fails to hold above the critical $1,700–$1,750 resistance region, traders could witness further declines towards support between $1,220 and $1,300, representing a potential 20% drop from current levels.

The lower boundary near $1,700 marks a key psychological and recent resistance zone, while the upper boundary around $1,750 coincides with the major 4.236 Fibonacci extension. A confirmed breakout would require strong spot demand and a retest of resistance as support.

Should the market reverse, major technical support lies at the 20-day exponential moving average (EMA) close to $1,296, followed by the 2.618 Fibonacci extension near $1,220. Together, these levels form a support range between $1,220 and $1,300. A fall from $1,522 to this zone would constitute roughly a 20% decline.