ZEC falls into a technical deadlock, privacy coin sector collectively under pressure

The sudden shift in the privacy coin market caught many by surprise. Once a shining star, ZEC experienced a cliff-like drop from its highs, pulling the entire privacy sector downward—ZEN fell 18%, and DASH plummeted 31%. The three major privacy coins moved in astonishing sync to the downside. According to the latest data, ZEC is currently priced at $404.81, with a significant decline from its previous peak.

What exactly happened behind this market move? The key lies in the reversal of two technical signals.

Funding Rate Reversal Point

During ZEC’s early upward phase, the funding rate remained in negative territory. This reflected a market where bulls were paying fees—institutions or large traders maintained negative rates to attract more chasing buyers. Recently, however, the funding rate has quietly turned positive, indicating a clear shift in the balance of power between bulls and bears.

When the rate turns positive, it means the longs are now paying fees. Coupled with the increased volume and breakdown of ZEC during this period, this change precisely signals a shift in market structure—positions are being reduced at an accelerating pace.

Technical Indicators Showing Weakness

From the candlestick patterns, ZEC has broken below the middle band of the Bollinger Bands, a clear sign of weakness. The MACD shows a bearish divergence above the zero line, with green bars gradually appearing, indicating waning momentum. Most concerning is the volume behavior—during the decline, volume has been steadily increasing, but any rebound attempts lack sufficient volume. This aligns with typical distribution phases, where volume expands during downtrends.

In this context, the market has hardly seen any meaningful rebounds. Some investors optimistic about the long-term prospects of privacy coins have entered at low levels after the sharp decline, only to find themselves trapped at higher prices—this is a typical continuation of the downtrend, suggesting the correction is not yet complete.

Rethinking Risks and Support Levels

From a technical support perspective, the lower Bollinger Band around $544 provides some support. However, if this critical level is broken with increased volume, the next key level to watch is $500, which could become a deeper testing zone. Given the current technical conditions and volume characteristics, rushing into the market at this stage offers a less-than-ideal risk-reward ratio.

The long-term logic of the privacy coin sector remains sound, but the short-term trend clearly indicates that more time is needed for a proper correction to play out. The simultaneous appearance of a positive funding rate, volume breakdown, and deteriorating technical indicators suggests there is still room for further downside.

The market always operates this way: late buyers get trapped at high levels, while bottom-fishers get caught in the middle. The key is to accurately assess the true market condition rather than being swayed by emotions.