ZCash (ZEC) pushed close to the $1,400 range over the past 24 hours, propelled by a combination of strong hype and a short squeeze, a cascade in which traders betting against the asset are forced to buy back their positions to cap losses, adding further upward pressure. The asset has been rallying for months on expectations of a move into a much higher price range.

The latest leg of the rally carried ZEC to a local high of $1,385.07, after which the coin held its gains above $1,350 amid growing expectations of a new phase of price discovery, in which past trading ranges offer limited guidance. ZEC now trades in the four-digit range for the first time since its launch in 2017 and has gained 166% year to date.

In the short term, the rally triggered a wave of short liquidations totaling $56.35M over the past 24 hours. The squeeze persisted near the $1,400 level, where liquidity remained available up to $1,440. Trading volume also climbed to its highest level of the year to date, reaching $2.59B. Activity accelerated over the past month as the privacy narrative and perceived growth opportunities drew in new capital. As Cryptopolitan reported, ZEC miners have likewise ramped up their activity in response to the price expansion.

Demand for ZEC has also come from the recent rise in reflection tokens, a category that redistributes a share of transaction fees to holders, most notably ZCAT, a meme token on the StonksFun platform. Following the ZEC rally, ZCAT responded with a 37% climb to $0.13.

ZEC Rally Liquidates Whales

The recent advance produced a series of short liquidations spanning both retail and whale trades, wiping out positions held by high-profile traders who had bet against ZEC. As with previous ZEC rallies, the climb toward all-time highs was paired with risky wagers on a sudden reversal.

One prominent position has so far survived the spike. Trader Garrett Jin, behind the largest on-chain attempt to short the coin, has not yet been liquidated. As of September 17, the position carried an unrealized loss of $26M and had received $645K in funding fees, the periodic payments exchanged between perpetual futures traders to keep contract prices aligned with spot. Its relatively high liquidation price of $2,631.55 leaves Jin with leeway to close the position even as the rally continues.

Another high-profile whale was less fortunate: that short position was liquidated, and the trader flipped to long ZEC positions. On Hyperliquid, only around 30% of traders are short on ZEC, with nearly 70% choosing long positions. Most of the short positions are carrying deep unrealized losses but continue to receive positive funding fees.

ZEC open interest, the total value of outstanding derivative positions, has moved to a three-year high of $2.14B. On centralized exchanges, the ratio of longs to shorts is flipped, with nearly 70% of traders going short. The expansion of derivative trading may make ZEC price moves even more dramatic, with regular attacks on short or long positions. As of September, Hyperliquid carries $845M in ZEC open interest, while Binance ranks second with $790M.

Will ZEC Challenge BTC?

The current narrative is that, having broken out into the four-digit price range, ZEC could rise to a price of a few thousand dollars, challenging BTC. The rally has gained support from influencers, who believe ZEC can follow the BTC growth scenario.

One of the short-term factors behind the rally is a recent vote to shorten block time, speeding up block production and the halving schedule, the mechanism that periodically cuts the issuance of new coins. ZCash has also increased its hashrate four times over the past year, driven by dedicated miners. The more viable mining operation signals long-term trust in the rally.

In the short term, however, ZEC is expected to be driven mostly by derivative trading and the battle between short and long positions. Until recently, ZEC was driven largely by spot demand, and traders will have to adapt to the new liquidity targeting the derivatives market. The liquidity resting up to $1,440 and the $2,631.55 liquidation price attached to the largest surviving short stand out as the market's clearest reference points as that battle plays out.

Source: Cryptopolitan