ZEC pumps close to $1,400 range after short squeeze

ZCash (ZEC) pumped close to the $1,400 range, on a mix of strong hype and a short squeeze in the past 24 hours. ZEC has been rallying in the past months, on expectations of rising to a much higher price range. 

ZEC continued its rally, rising to a local high of $1,385.07. Later, ZEC retained its gains above $1,350, with more expectations of rising to a new range of price discovery. ZEC is now in the four-digit range for the first time since its launch in 2017, and has grown by 166% year to date. 

In the short term, the ZEC rally caused a wave of short liquidations, for a total of $56.35M in the past 24 hours. The short squeeze continued close to the $1,400 range, with liquidity available up to $1,440. 

The current rally also comes with the highest trading volumes for the year to date, reaching up to $2.59B. ZEC trading accelerated in the past month, as the privacy narrative and growth opportunities drew in more investments. As Cryptopolitan reported, ZEC miners also accelerated their activity in response to the price expansion.

Demand for ZEC also came from the recent rise in reflection tokens, especially ZCAT, the meme token on the StonksFun platform. Following the ZEC rally, ZCAT responded with a 37% climb to $0.13. 

ZEC rally liquidates whales

The recent ZEC rally led to a series of short liquidations, on a mix of retail and whale trades. The price spike managed to liquidate the positions of high-profile traders that tried to short ZEC. 

As with other ZEC rallies, the climb to new all-time highs was combined with risky bets on a sudden reversal. 

The sudden ZEC spike has not yet liquidated the position of trader Garrett Jin, which was the largest on-chain attempt to short the coin. As of September 17, the position is carrying an unrealized loss of $26M, receiving $645K in funding fees. The position has a relatively high liquidation price of $2,631.55, allowing Jin leeway to close the position even with the ongoing rally. 

Another high-profile whale had the short position liquidated and flipped to long ZEC positions. On Hyperliquid, only around 30% of traders are short on ZEC, with nearly 70% choosing long positions. Most of the short positions are carrying deep unrealized losses, but receive positive funding fees. 

ZEC open interest has moved to a three-year high of $2.14B. On centralized exchanges, the ratio of longs to shorts is flipped, with nearly 70% of traders going short. The expansion of derivative trading may make ZEC price moves even more dramatic, with regular attacks on short or long positions. As of September, Hyperliquid carries $845M in ZEC open interest, while Binance is second with $790M.

Will ZEC challenge BTC?

The current narrative is that once ZEC has broken out to a four-digit price range, it could rise to a price of a few thousand dollars, challenging BTC. The ZEC rally gains support from influencers, who believe ZEC can follow the BTC growth scenario. 

One of the short-term factors for the ZEC rally is a recent vote to shorten block time, speeding up production and the halving schedule. 

ZCash has already increased its hashrate four times in the past year, driven by dedicated miners. The more viable mining operation shows long-term trust in the rally. 

In the short term, however, ZEC will be mostly driven by derivative trading and a battle of short and long positions. Until recently, ZEC was mostly driven by spot demand, and traders will have to adapt to the new liquidity targeting the derivatives market.

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