Zcash (ZEC) traders face a growing liquidation risk after the privacy-focused cryptocurrency nearly doubled and approached the $1,700 region before dumping below $1,500 on Wednesday.
ZEC traded near $1,500 on Thursday, leaving leveraged long positions accumulated below the current price vulnerable to a correction.
Data from CoinGlass indicates that more than $12 million in estimated long liquidations were wiped out from the market after ZEC dipped below $1,488 on Wednesday.
The derivatives imbalance coincides with a bearish divergence on Zcash’s daily chart and resistance between $1,700 and $1,750.
Together, those signals suggest that the rally may be losing momentum despite the token’s continued strength.
ZEC traders lose $12 million as market retraces
CoinGlass’s three-month Binance ZEC/USDT liquidation heatmap shows approximately $44.39 million in cumulative long-liquidation leverage below $1,488.
Around $1.62 million of that estimated exposure was concentrated directly at the $1,488 level.
Liquidation heatmaps identify price areas where leveraged positions may be forced to close. They are estimates based on available exchange data and should not be interpreted as exact forecasts of future liquidations.
The chart nevertheless points to a clear imbalance: potential long liquidations below the current price were substantially larger than short-liquidation clusters above it.
This positioning shows that ZEC has cleared the downside liquidity before reclaiming the $1,500 psychological level.
Zcash’s rapid appreciation has encouraged traders to increase bullish exposure, but leveraged positioning can make the market more fragile.
A correction that might otherwise remain orderly could accelerate if it reaches a densely populated liquidation area. Each forced closure adds market sell orders, potentially pushing the price into the next cluster.
The comparatively limited short exposure above ZEC also means the market may receive less forced buying if the token continues higher.
That does not prevent another rally, but it suggests the derivatives structure currently offers more fuel for a downside cascade than an upside squeeze.
Liquidation exposure is not a directional indicator by itself. Large clusters can remain untouched if spot demand keeps the price above them, and traders can add collateral or close positions before forced liquidation occurs.
However, when concentrated leverage appears alongside weakening momentum and major resistance, it becomes more relevant to the short-term risk outlook.
Bearish divergence warns of fading momentum
While the Zcash daily chart remains bullish, it is showing a bearish divergence between price and the Relative Strength Index.
ZEC has continued producing higher price highs after it topped the $1,650 level earlier this week.
The RSI, however, has failed to confirm the advance and has instead formed a lower high.
A bearish divergence occurs when an asset continues rising while its momentum indicator weakens. The pattern suggests that each new price high is receiving less underlying momentum than the previous one.
The signal does not guarantee an immediate reversal. Strong trends can continue for some time despite a divergence, particularly when spot demand remains elevated.
Still, the pattern increases the risk of a pullback when combined with an RSI reading near 65, slightly below the overbought level.
The current RSI suggests ZEC is stretched following its near-100% advance. A cooling period could therefore occur even if the token’s longer-term trend remains constructive.
If the rally resumes, the $1,700–$1,750 range represents the next major test for Zcash bulls.
The lower boundary is a psychological and recent price resistance, while the upper portion contains the 4.236 Fibonacci extension near $1,750.
A rejection from this zone would add confirmation to the bearish divergence. Traders may then turn their attention below the $1,488 liquidation area, where forced selling could increase volatility.
A decisive breakout above $1,750 would weaken the immediate bearish thesis. Ideally, such a move would be supported by strong spot volume and followed by a successful retest of the former resistance as support.
Without that confirmation, a brief move above the zone could become a failed breakout and encourage profit-taking.
However, if the bearish divergence develops into a larger correction, the first major technical support is the 20-day exponential moving average near $1,296.
The EMA is positioned close to the upper boundary of the projected downside zone. Below it, the 2.618 Fibonacci extension around $1,220 provides another potential support level.
Together, those indicators create a target range between approximately $1,220 and $1,300. A decline from $1,522 into that zone would amount to roughly 20%.
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