Zcash dips below $1,348 as ETF outflows ease and NU7 enters testing

Key Takeaways

• Zcash is valued at approximately $1,348 on Tuesday, maintaining the slight upward movement that started on Sunday.
• The NU7 upgrade is live on the public testnet, with a launch decision set for Oct. 20 and a target mainnet release on Nov. 5.
• While rising momentum bodes well for a potential recovery, ZEC must first break through a resistance band between $1,377 and $1,384.

On Tuesday, Zcash is consolidating just under the $1,348 mark, holding onto minor gains achieved since Sunday. Market participants are currently weighing a slowdown in ETF outflows alongside developmental milestones for the privacy coin’s upcoming network upgrade.

The short-term outlook for the privacy-centric asset remains mixed. Although momentum metrics are pointing upward, the price has yet to climb above two critical moving averages on the four-hour chart.

On a positive note, a deceleration in withdrawals from Grayscale’s Zcash trust indicates that selling pressure is easing. However, net flows remain in negative territory, meaning this deceleration reflects a drop in selling activity rather than a wave of fresh buying interest. This shift offers a more favorable environment for a potential rebound, even though a decisive breakout is still pending.

NU7 testnet launch introduces quicker block times and updated reward structures

The NU7 upgrade for Zcash has successfully launched on the public testnet. Network developers plan to finalize the mainnet activation timeline on Oct. 20, keeping Nov. 5 as the projected release date.

A central feature of the upgrade is the reduction of target block times from 75 seconds down to 25 seconds. While more frequent block generation may accelerate transaction confirmations, it does not automatically guarantee a threefold increase in speed for all transactions, as actual block times and specific platform confirmation thresholds will still dictate transaction finality.

Additionally, NU7 features a Network Sustainability Mechanism designed to allocate 60% of transaction fees back into future mining rewards. The update also caps shielded actions to mitigate network spam.

Should the upgrade go live on the mainnet, legacy Sprout version 4 transactions will be deactivated. Consequently, users holding assets in this pool must transfer them beforehand to preserve their ability to spend those funds under the current framework. Because these upgrades are still confined to the testnet, their features have not yet taken effect on the live Zcash blockchain.

Regarding institutional flows, SoSoValue data reveals that Grayscale’s ZCSH fund saw net outflows of roughly $3.57 million on Monday. This marks a sharp decline from the $93.56 million in total redemptions recorded last week, which featured three separate days of outflows exceeding $25 million each.

While Monday’s reduced outflow is a positive development compared to last week’s heavy selling, a single day’s performance does not guarantee a positive trend for the remainder of the week. The data points to a temporary reduction in immediate selling pressure, though the long-term direction of these fund flows remains unclear. A shift back to consistent net inflows is required to confirm a true resurgence in institutional demand.

Rising momentum collides with key overhead barriers

Analyzing the four-hour chart, ZEC continues to trade below both its 50-period and 100-period exponential moving averages (EMAs), situated at roughly $1,377 and $1,384. This range serves as the primary overhead resistance. Successfully breaking above this cluster would strengthen the short-term technical outlook, shifting the focus to the $1,422 mark, which represents the broken low from Sept. 18. Past that, the Sept. 23 peak of $1,679 remains a longer-term target.

Technical indicators are showing signs of life. The Moving Average Convergence Divergence (MACD) has crossed above its signal line, accompanied by an expanding positive histogram. Meanwhile, the Relative Strength Index (RSI) sits near 50, reflecting a neutral momentum stance. The technical outlook also points to a bullish divergence, hinting that selling pressure is beginning to fade, though this signal still requires validation from price action.

On the downside, the ascending 200-period EMA near $1,281 serves as the key immediate support level during this consolidation phase. Staying above this baseline keeps the narrative alive that the recent pullback is merely a correction within a larger recovery trend. Conversely, a clean break below this EMA would challenge that thesis and potentially expose the next major support level around $1,050.

Ultimately, Zcash is caught between an ascending support level and overhead resistance. While a decline in ETF outflows and strengthening momentum indicators support a bullish thesis, ZEC must clear the $1,377 to $1,384 resistance zone to confirm a definitive upward trend.