Zcash (ZEC), the privacy-focused cryptocurrency, sold off sharply on Tuesday as a hawkish repricing of Federal Reserve policy, triggered by Fed Governor Waller's remarks and a hotter-than-expected US CPI report, weighed across the cryptocurrency market. The move underscored how closely digital assets have been trading against shifts in Fed policy expectations.

For context, Waller said he would support a rate hike in December regardless of the incoming inflation data, and went further by raising the possibility of a larger 50 basis point move should October's inflation figures come in hotter than expected. That scenario materialized: the US CPI data arrived above expectations, lifting the probability of a 50 bps hike. Following the release, Fed's Hammack also opened the door to a larger rate increase.

Traders are currently pricing in just a 12% probability of a 50 bps hike, though those odds could climb if more Fed officials endorse the idea or refrain from pushing back against it.

On the geopolitical front, US-Iran negotiations remain in a stalemate. The WSJ reported yesterday that US Vice President Vance is considering holding face-to-face talks with a senior Iranian security official in an attempt to bring the conflict to an end. However, separate reports suggested that senior Iranian officials believe the US is preparing either further military strikes or tighter economic pressure. Significant mistrust persists between the two sides, reinforcing the view that a diplomatic breakthrough may not be as close as markets had initially expected.

Looking ahead, Zcash is likely to remain under pressure amid the negative macro backdrop, with hawkish Fed expectations and geopolitical uncertainty limiting upside momentum. Conversely, more dovish Fed commentary or a breakthrough in US-Iran negotiations could improve risk sentiment and trigger a relief rally across the crypto market.

Zcash Technical Analysis – Daily Timeframe

On the daily chart, Zcash recently broke below the key 1,031 level, opening the door for a move toward the major upward trendline around the 800 level. If the price reaches that area, buyers could step in, with risk defined below the trendline, to position for a rally into the 2,000 level, with the 1,031 level as the first target. Sellers, on the other hand, would want to see the price break lower to extend bearish positions toward the 500 level next.

Zcash Technical Analysis – 4-Hour Timeframe

On the 4-hour chart, a downward trendline is defining the bearish momentum. In the event of a pullback, sellers could lean on the trendline, with risk defined above it, while continuing to target the major upward trendline. Buyers, meanwhile, would look for a break higher to pile in for a rally into the 1,380 resistance next.

Zcash Technical Analysis – 1-Hour Timeframe

On the 1-hour chart, the setup favors sellers, who have the better risk-to-reward positioning around the trendline, while buyers will need a breakout to pile in for a rally toward the 1,380 resistance. The red lines on the chart define the average daily range for today.

Upcoming Catalysts

The latest US Jobless Claims figures are due today, offering a fresh read on the labor market as traders weigh the prospect of a December rate hike. Tomorrow, the week concludes with the release of the US PPI data, adding another inflation data point after this week's hotter-than-expected CPI report.