- Zcash is likely to break down to $35 following the formation of a head-and-shoulders pattern.
- Reduced network growth in the wake of the network halving adds credence to the bearish outlook.
Zcash recently completed its first halving in conjunction with a network upgrade. The events were marked by a bullish price action that saw ZEC rise to $68. As the protocol settles down following the high on-chain activity, ZEC/USD is facing a potential breakdown to $35.
Zcash is staring into the abyss as $35 beckons
At the time of writing, Zcash is trading at $61.7 after sliding below the 50 Simple Moving Average on the 4-hour chart. Bearish price action is still underway and might continue if the immediate support at the 200 SMA fails to hold. On the other hand, the 100 SMA is also in line to cushion the potential drop below an ascending parallel channel as observed on the 4-hour chart.
 (4)-637413596543718439.png)
ZEC/USD 4-hour chart
Similarly, the 12-hour chart reinforced the bearish outlook to $35 following the formation of a head-and-shoulders (H&S) pattern. This technical formation hints at a potential slump under $51, which might eventually trigger a surge in sell orders. The volume likely created under this crucial support may be enough to push Zcash to $35 before a significant reversal occurs.
-637413596281065805.png)
ZEC/USD 12-hour chart
Following the first halving, on-chain activity shot up within the network. The number of new addresses joining the blockchain even made a higher high to roughly 4,300, according to IntoTheBlock. However, an ongoing downtrend hints at a bearish future for ZEC, validating the potential for breakdown to $35. By Thursday, the number of newly created addresses had fallen to approximately 3,700.
-637413597485633571.png)
Zcash new addresses chart
It is worth mentioning that the bearish narrative will be invalidated if Zcash spiked upwards from the current price level and overcame the recent resistance at $68. The 4-hour chart also suggests that closing the day above the 50 SMA will prevent an immediate slump to lower levels, giving bulls ample time to plan a recovery mission above $68.
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