Zcash (ZEC) is consolidating just below $1,348 on Tuesday, holding on to the modest gains it has recorded since Sunday as market participants weigh easing outflows from Grayscale's Zcash-focused fund against progress on the network's next upgrade, NU7.

The privacy-focused coin faces a mixed near-term picture: momentum indicators on the four-hour chart are improving, yet price remains below two key moving averages. Withdrawals from the Grayscale fund have also slowed, suggesting redemption pressure has moderated — though flows remain negative, meaning the latest figures point to reduced selling through that channel rather than renewed net buying. Together, the developments offer a more supportive backdrop for a recovery, even if a sustained breakout has yet to materialize.

NU7 tests faster blocks and revised mining rewards

Zcash's NU7 upgrade is now active on the public testnet — the rehearsal environment where developers validate consensus changes under live-network conditions before they reach the main network. Developers are scheduled to decide on mainnet activation on Oct. 20, with Nov. 5 remaining the target deployment date.

If activated, NU7 would cut the targeted block spacing from 75 seconds to 25 seconds. More frequent block production could shorten confirmation waits, although it does not guarantee that every transaction will settle three times faster — actual block intervals and the confirmation requirements set by individual services would apply.

The upgrade also introduces a Network Sustainability Mechanism that redirects 60% of transaction fees toward future mining rewards, linking a larger share of miner compensation to activity on the network itself. A further change limits shielded actions in a bid to curb network spam. Mainnet activation would additionally disable legacy Sprout version 4 transactions — Sprout being the protocol's oldest shielded pool — meaning users with funds still in that pool would need to move them beforehand to retain the ability to spend them through the existing system.

All of these changes remain in testing; none of the potential benefits has yet been deployed across the live Zcash network.

Grayscale ZCSH outflows slow

Grayscale's ZCSH fund recorded approximately $3.57 million in net outflows on Monday, according to SoSoValue data. That followed $93.56 million in total withdrawals last week, a stretch that included three sessions with more than $25 million in outflows each.

Monday's smaller withdrawal marks an improvement relative to those individual sessions, though comparing a single trading day with an entire week does not establish how the current week will finish. The latest data suggests less immediate redemption pressure while leaving the direction of future flows uncertain. A return to sustained inflows would provide firmer evidence that demand through the fund is recovering.

Improving momentum meets overhead resistance

On the four-hour chart, ZEC remains below its 50-period and 100-period exponential moving averages at approximately $1,377 and $1,384 — a cluster that forms the immediate resistance zone. A sustained move above both averages would improve the near-term structure and bring $1,422, the broken Sept. 18 low, into focus. Beyond that level, the Sept. 23 high at $1,679 stands as a more distant upside reference.

Momentum indicators offer some encouragement. The Moving Average Convergence Divergence has crossed above its signal line, with its histogram expanding into positive territory, while the Relative Strength Index sits near 50, indicating broadly neutral momentum. The analysis also identifies a bullish divergence, suggesting selling momentum may be weakening, though price confirmation remains necessary.

The rising 200-period EMA near $1,281 provides the immediate support reference beneath the current consolidation. Holding that level would preserve the interpretation that recent weakness is a correction within the broader recovery; a sustained break below it would weaken that view and expose the next cited support near $1,050.

For now, Zcash is trading between a rising support average and overhead resistance. Slower ETF withdrawals and improving momentum bolster the recovery case, but clearing the $1,377–$1,384 zone would deliver a more concrete bullish signal.

Source: CoinJournal