ZEC rallies into the green as shielded coins reach new record

ZCash (ZEC) spent another day among top crypto gainers, breaking out from the pack of altcoins. ZEC traded close to $360 once again, as deposits to the shielding pools accelerated again. 

The ZCash (ZEC) rally found support after the coin dipped closer to $300. Despite the setback for other assets, ZEC broke out of the pack again, moving closer to $360. 

ZEC now presents extreme risks for attempting to short the coin, potentially breaking out to cause a short squeeze. ZEC open interest is near an all-time high, with derivatives most concentrated on Binance. ZEC showed it is capable of bouncing from a recent local low of $288, resuming its overall bullish trend.

The ZEC community remains bullish, with still significant mindshare on social media. The expectations are for ZEC to claim four-digit prices and line up among top tokens, with a move above $1,000 in the next few weeks.

Traders short ZEC despite liquidation risks

Despite the risk of shorting, the ZEC rally has coincided with a trend of making opposite bets. Over 60% of open interest is in short positions, with the long/short ratio shifting since the end of September. ZEC had only brief periods of predominantly long positions. 

Short liquidity has accumulated on Binance all the way to $378, with much less liquid long positions. Based on the liquidation heatmap, ZEC is capable of another breakout to liquidate the short positions. 

Spot and futures prices for ZEC do not diverge at the moment. However, spot volumes are relatively small, at around $230M, while Binance derivative trading reached daily volumes of $1.2B. 

More ZEC enters shielded pools

While derivative traders make bets on the direction of ZEC, whales and community members are widening the supply of shielded coins. The drive would allow a bigger section of DeFi to become anonymous. 

Over 4.9M ZEC were locked in the three most popular shielded pools, with most coins entering Orchard, the highest level of anonymity. 

https://twitter.com/ZBitUSD/status/1983837130754494869

The shielded ZEC, which is tradable through the Zashi wallet, has created a pool for veiling DEX swaps. In theory, it is now possible to swap into ZEC and back into other assets, breaking the chain of transparent on-chain ownership. 

The Zashi wallet access is one of the tools capable of making anonymous trading highly accessible, adding another tool to DEX activities.

Interest in ZEC spiked after investor Naval Ravikant mentioned the coin several times. However, mainstream adoption is less probable. Currently, shielding and usage on Near Protocol mean ZEC is mostly attractive for crypto natives, who are used to in-wallet trading and general DeFi activity. ZEC is also still far from becoming an ETF or a DAT company asset. 

Privacy coins as a whole are still closely watched, as they expanded their total valuation to over $21B. For now, XMR and LTC have tried a similar breakout, though ZEC has outperformed all other privacy coins.