Analysis: Zcash falls over 22% into local bear market as ETF outflows rise

Zcash (ZEC) has fallen over 22% from last month's high of $1,689 to the current $1,313, entering a local bear market. Zcash remains about 622% above its lowest level this year. Zcash ranks as the world's ninth-biggest coin. Investors show signs of capitulation and profit-taking after Zcash's strong rise earlier this year.

The recently launched Grayscale Zcash ETF (ZCSH) recorded over $26 million in outflows on Friday, its third consecutive day of outflows. The ETF has lost over $55 million this month after adding $245 million last month. The ETF's cumulative inflows since inception increased by $212 million, bringing total assets under management to $751 million. The ETF's outflows diverge from inflows into funds tracking other leading cryptocurrencies. Bitcoin funds have added over $150 million in assets. Spot XRP funds have added over $1 million.

Zcash's futures open interest has continued to fall this month, reaching $2.5 billion from last month's high of over $3.4 billion. Futures open interest measures futures contracts that remain open and have not been closed or settled. Higher open interest signals rising demand. However, Zcash's shielded supply has continued rising over the past few months despite the price decline. The shielded supply has risen to over 4.89 million tokens from July's low of 4.3 million.

The current Zcash price decline could be a temporary pullback. Zcash remains above the Supertrend indicator, signaling that buyers remain in control. Zcash also remains above the 50-day moving average. However, the Relative Strength Index (RSI) has fallen below the neutral level of 50. The RSI suggests that Zcash could fall further as the indicator approaches oversold levels, before the price rebounds toward this year's high. Zcash has experienced similar declines and rebounds before, including in September. A move above the year-to-date high of $1,689 would signal further gains.