Zcash, a privacy-focused cryptocurrency that uses zero-knowledge-proof technology to enable shielded transactions, sold off sharply alongside much of the broader cryptocurrency market as intensifying concerns over economic growth triggered widespread risk aversion across risk assets.

The selling began late on Wednesday and then accelerated after The New York Times reported that the US and Israeli militaries had prepared detailed plans for potential strikes against Iran following the US midterm elections. The report also indicated that the United States is reinforcing its military presence in the region, with additional forces expected to be fully deployed by early November.

The risk of another direct confrontation between the US and Iran, combined with growing concerns about economic growth and a Federal Reserve forced to maintain a hawkish stance amid inflationary pressures, weighed heavily on the cryptocurrency market. A hawkish stance, meaning tighter monetary conditions aimed at containing inflation, is generally viewed as reducing appetite for riskier assets such as cryptocurrencies, since it raises the relative appeal of safer, yield-bearing instruments.

Today's US Flash PMI releases are likely to serve as the next major catalyst. The flash readings are preliminary estimates of business activity in the manufacturing and services sectors, compiled from surveys of purchasing managers and published ahead of the final figures, and are closely watched as early indicators of economic momentum. Soft readings could intensify growth concerns and set off another selloff in Zcash, while better-than-expected data could ease growth fears in the near term and lead to a relief rally. Any such recovery, however, would likely prove temporary, as the data would not change the broader bearish backdrop.

Zcash Technical Analysis – Daily Timeframe

On the daily chart, Zcash trimmed most of its weekly gains in the previous session amid the widespread risk aversion. Should the price pull back into the 1,031 support again, buyers are expected to step in with risk defined below the level, positioning for a rally into the 2,000 level. Sellers, on the other hand, will look for a break lower to increase bearish bets into the 800.00 level next.

Zcash Technical Analysis – 4-Hour Timeframe

On the 4-hour chart, the price broke above the downward trendline and eventually rallied all the way to the key 1,350 level before pulling back. A recovery into the 1,350 level could bring sellers in with risk defined above the level, positioning for a drop into the 1,031 support. Buyers, for their part, will want to see the price break higher to increase bullish bets into the 2,000 level next, with the 1,692 high as the first target.

Zcash Technical Analysis – 1-Hour Timeframe

On the 1-hour chart, the price broke below the upward trendline that had been defining the bullish momentum. Sellers piled in on the break to target a drop into the 1,031 level, but the price started to consolidate near the trendline. A break of the recent low around the 1,185 level would likely lead sellers to increase bearish bets into new lows. Buyers, on the other hand, will need the price to rise back above the trendline to start positioning for a recovery into the 1,350 resistance. The red lines on the chart define the average daily range for today.

Upcoming Catalysts

The trading week concludes today with the release of the US Flash PMIs.