Zcash (ZEC) continued to trade above $1,600 on Wednesday after gaining 7.5% in the previous session. The token was trading near $1,619 as increased use of the network's privacy features and demand for regulated ZEC investment products provided additional support for its recent price move.

Weekly shielded transactions reached 62,379, the highest level recorded in four years. The newer Ironwood pool accounted for 55,549 of those transactions, or approximately 89% of the weekly total. Meanwhile, Grayscale's ZEC-focused product recorded $32.81 million in inflows on Tuesday, lifting its net assets under management to approximately $979.48 million, according to SoSoValue data.

ZEC is approaching the upper boundary of a bullish channel near $1,700. A confirmed break above that level could bring the $2,000 psychological threshold into focus, while a failure to clear the resistance could lead to a retreat toward support near $1,595 or the $1,422–$1,424 region.

Shielded activity reaches a four-year high

Zcash's latest advance has coincided with increased use of its shielded transaction system, which allows users to conceal certain transaction details. Data from Blockworks shows that the network processed 62,379 shielded transactions last week, the highest weekly total since 2022.

The increase suggests that demand for Zcash's privacy functionality has risen alongside the token's price. The Ironwood pool represented 55,549 of the transactions recorded during the week. The concentration of activity in the newer pool indicates that users are increasingly adopting the latest version of Zcash's shielded infrastructure.

Unlike transparent blockchain transactions, shielded transfers can use cryptographic proofs — zero-knowledge proofs, a technology Zcash has used since its launch in 2016 — to verify that a transaction is valid without publicly exposing all of its underlying information. That functionality is central to Zcash's role as a privacy-oriented network. Zero-knowledge proofs have since a broader focus of development across the crypto industry, with several networks applying the technology to privacy and scaling.

Higher shielded activity may provide a stronger basis for the current rally because it indicates rising network usage rather than a price move driven entirely by speculation. However, one strong week does not establish a sustained adoption trend. Shielded transaction volumes would need to remain elevated over a longer period to show that the increase reflects a durable change in user behavior.

Institutional investment products have provided another source of support. Grayscale's ZEC-focused product received $32.81 million in inflows on Tuesday, according to SoSoValue data. The inflow increased the product's net assets under management to about $979.48 million.

The daily increase indicates stronger demand for exposure to ZEC through a regulated investment vehicle. Such products allow investors to track the token's performance without directly purchasing, storing, and securing it.

Zcash has also gained additional institutional exposure in Europe. 21Shares, one of the largest issuers of crypto exchange-traded products in the region, recently launched a ZEC-focused exchange-traded product on Euronext, expanding the regulated channels available to investors seeking exposure to the privacy token.

The combination of inflows into Grayscale's product and the launch of the 21Shares ETP points to increased institutional interest in Zcash. Continued inflows could reduce the amount of ZEC circulating freely in the market and support prices if demand remains strong. Investment-product flows can also reverse quickly, however, leaving traders to assess whether Tuesday's inflow marks the beginning of a sustained trend or a temporary response to ZEC's recent performance.

ZEC tests resistance near $1,700

Zcash was trading around $1,619 on Wednesday, maintaining its short-term upward structure. On the four-hour chart, ZEC remained above its major exponential moving averages. The 50-period EMA stood near $1,424, while the 100-period and 200-period EMAs were around $1,295 and $1,108, respectively.

Trading above all three averages shows that the token was above these measures across multiple short-term time frames. Their alignment also creates several potential support levels if ZEC pulls back.

ZEC is approaching a descending resistance line connecting the August 23 and September 19 highs. That barrier is located near $1,700. At the same time, a rising trendline connecting the September 2 and September 16 lows forms the lower boundary of a bullish channel, showing that the recent market structure has featured progressively higher lows.

A confirmed move above the channel resistance could strengthen the advance and take ZEC into price-discovery territory. In that scenario, the next notable level would be the round-number mark at $2,000, roughly 25% above $1,600.

A breakout would ideally be accompanied by higher trading volume and a sustained close above $1,700. A brief move above the resistance followed by a rapid reversal could instead indicate a failed breakout.

Momentum indicators remained constructive. The Moving Average Convergence Divergence indicator was in positive territory and had crossed above its signal line. The crossover indicates that upward momentum was strengthening as ZEC tested the upper boundary of its channel.

The Relative Strength Index stood near 63, above the neutral midpoint of 50 but below the conventional overbought level of 70. The reading indicated strong momentum without showing that the rally had reached an excessively stretched condition.

If ZEC fails to overcome $1,700, its first support is near $1,595, corresponding to the September 19 high. Holding that former resistance as support would preserve the immediate breakout structure. Below $1,595, the next significant area is between $1,422 and $1,424. That zone combines the September 18 low with the four-hour chart's 50-period EMA, making it a potentially stronger support region during a deeper correction.

The next major test for ZEC is whether buyers can move the token above $1,700 and establish that level as support. A sustained break could place $2,000 in focus, while rejection at the channel boundary would leave the support levels near $1,595 and $1,422–$1,424 as the principal areas to watch.

Source: CoinJournal