Zcash (ZEC) held its ground near $1,300 on Friday, standing out as one of the strongest performers in a cryptocurrency market still recovering from a selloff that triggered more than $1 billion in liquidations the previous day. The privacy-focused asset traded around $1,290, with attention centered on its Network Upgrade 7 (NU7), scheduled for activation on Friday.

The upgrade introduces several substantive changes to Zcash's blockchain, including faster block confirmations, the retirement of older shielded transaction pools, and a new mechanism designed to support the network's long-term sustainability. Numbered network upgrades are the mechanism Zcash has long used to ship protocol changes, activating automatically once the blockchain reaches a predetermined block height so node operators can prepare in advance. Zcash's shielded pools, the older of which NU7 will retire, are built on the zero-knowledge cryptography that underpins the network's privacy features.

Institutional flows, however, tell a different story. Grayscale's ZEC-focused exchange-traded fund recorded nearly $11 million in net outflows on Thursday, bringing cumulative weekly withdrawals to $14.77 million. Even so, derivatives market participation has expanded, with Zcash futures open interest rising to 2.15 million ZEC.

From a technical standpoint, ZEC must clear resistance at $1,340 to reinforce its bullish setup and potentially extend its recovery toward $1,698.

Zcash bucks crypto market selloff ahead of NU7 activation

Zcash has shown notable relative strength amid a broad decline across cryptocurrency markets. Thursday's wider selloff triggered more than $1 billion in derivatives liquidations as investors reduced exposure to risk-sensitive assets. Bitcoin, Ethereum, and several major altcoins posted substantial losses, reflecting heightened market uncertainty.

ZEC, by contrast, continued to trade around the psychological $1,300 level. That resilience has coincided with mounting attention on the network's NU7 upgrade, scheduled for activation at block height 3,543,405. The upgrade bundles a series of technical changes designed to improve network efficiency and sustainability, and the pending activation has offered a potential catalyst for traders seeking opportunities outside the broader market downturn. For node operators, activation at a fixed block height provides a clear deadline for running compatible software, the standard coordination process behind each of Zcash's past network upgrades.

Institutional demand for Zcash investment products has weakened despite the token's relative price strength. According to SoSoValue, Grayscale's ZEC-focused ETF, trading under the ticker ZCSH, recorded $10.99 million in net outflows on Thursday. Those withdrawals pushed the fund's cumulative weekly net outflows to $14.77 million, suggesting investors using the ETF have been reducing their exposure to Zcash. The fund outflows stand in contrast to expanding derivatives participation, with futures open interest rising to 2.15 million ZEC, a divergence that shows different corners of the Zcash market responding differently as the upgrade window approached.

Zcash technical analysis: $1,340 holds the key

Zcash's daily chart shows the cryptocurrency consolidating below a significant horizontal resistance level. At roughly $1,290, ZEC remains beneath the $1,340 barrier established by the October 8 high, a level that has emerged as a key obstacle for buyers attempting to extend the recent recovery.

A decisive daily close above $1,340 could signal a bullish breakout from the current consolidation range. Such a move may attract additional buying interest and shift attention toward the September 26 peak at $1,698. The bullish scenario, however, depends on a confirmed breakout and sustained buying momentum. Failure to overcome $1,340 would likely keep ZEC confined within its existing trading range, whose lower boundary sits near $1,112, corresponding to the October 8 low.

Despite the overhead resistance, Zcash's broader technical structure remains constructive. The cryptocurrency trades above its 50-day Exponential Moving Average (EMA), currently positioned around $1,216, while the 50-day EMA sits well above the 200-day EMA at approximately $856. That alignment suggests the underlying trend continues to favor buyers even as the token consolidates.

Momentum indicators lend further weight to the constructive outlook. The daily Relative Strength Index (RSI) stands near 53, above the neutral 50 threshold, while the Moving Average Convergence Divergence (MACD) indicator holds above its signal line, indicating that bullish momentum remains intact. Taken together, these readings suggest ZEC retains the potential for another upward move if buyers can overcome the $1,340 resistance level.

Zcash's next significant move may hinge on whether buyers can push the cryptocurrency above $1,340. A sustained breakout could open the door toward $1,698, the previous peak recorded on September 26. If ZEC fails to reclaim that level, traders may turn their attention to nearby support. The first important downside level is the 50-day EMA around $1,216, and a sustained decline below it would weaken the near-term bullish outlook. The next major support would emerge at $1,112, the lower boundary of the current consolidation range, where a breakdown could signal a more significant deterioration in market structure.

For now, ZEC remains in a relatively constructive position above its major moving averages, although resistance at $1,340 continues to limit upside momentum. Beyond the chart, the near-term items to watch are NU7's activation itself and the next rounds of ETF flow data, which will show whether the gap between the token's price strength and fund-level positioning persists.

This article was originally published on CoinJournal.