Zcash has suffered a pretty disastrous year during 2019 as it sits almost 40% lower than the 2019 opening price - as of November 2019. The cryptocurrency had started the year off on the bullish footing after it managed to increase by a total of 165% to the 2019 high of $123.56 in June.
However, after reaching the 2019 high, ZEC rolled over and started to fall aggressively. ZEC quickly fell beneath the $100 level in July 2019 and continued to fall further, by a total of 70%, to reach the current trading price of $37.71 (as of November 10th, 2019).
Despite this poor 2019 performance, I still believe that Zcash can EASILY turn things around and start to surge as 2020 progresses. The development behind the protocol continues to power along as the team improve their privacy and security features on a regular basis. Furthermore, a scheduled block halving is expected toward the end of 2020 which will see the influx of ZEC reduced by 50% and may even bring an entirely new era of development with the removal of the controversial Founders Reward.
For these combined reasons, I believe ZEC has a very strong potential to surge by a total of 300% (from the current price) to reach my target of $150 at some point in 2020.
In this article, I’ll firstly cover a range of topics that I believe will influence ZEC in reaching my $150 target during 2020 and then analyze ZEC on the long term daily charts to highlight some areas of resistance on the way toward the target.
Zcash - A Project First Through The Door
Zcash is a privacy-focused cryptocurrency that was the first to integrate the zk-SNARKs cryptographic technology into its blockchain. The fact that Zcash was one of the first to integrate zk-SNARKs helped the project to gain a lot of positive attention.
Zcash, now actively developed and maintained by the Electric Coin Company, creates a strong option of privacy for all of its users - certainly the project’s most attractive feature. The implementation of zk-SNARKs allows users to select between two different types of wallet addresses when conducting transactions; Shielded or Transparent.
Transactions that use Transparent addresses are very similar to those of Bitcoins’, recorded on a public blockchain for everybody to see. This reduces the privacy for the user as blockchain forensics can easily trace transactions. However, a transaction using Shielded addresses is considered to be highly private as the Zero Knowledge Proof technology causes the transaction amount and the wallet addresses of the users to remain hidden on the blockchain.
The privacy features behind Zcash are pretty difficult to grasp and I will not be going into too much detail here. Instead, please take a look at this great in-depth write up about Zcash which covers their privacy technology in great detail.
ZCash Is Already A Regulated Cryptocurrency Platform
Zcash has been highly criticized in the past for communicating heavily with regulators. However, the decision for the Zcash team to spend a large proportion of their resources on educating regulators about cryptocurrencies has paid off - big time! American lawmakers have officially approved Zcash as a legitimate cryptocurrency platform. This has even caused Bianance.US, the USA arm of Binance Exchange, to add ZEC to its platform in October 2019;
This is super important for Zcash as they have direct access to a heavily regulated US market, whilst the majority of cryptocurrencies fail to gain access to it. This greatly increases the audience that Zcash can directly reach to provide a secure means of conducting anonymous transactions.
The Electric Coin Company Is Always Thinking Ahead
The team behind ZCash always seem to be thinking ahead after the founder, Zooko Wilcox, rebranded the ZCash company into the Electric Coin Company earlier in the year. The Zcash Company was in charge of maintaining the development since the inception of the ZCash blockchain. However, the team decided to change the name from the Zcash Company to be more distinguished from the Zcash coin itself, as this is an independent asset.
This is an interesting move from the team as it places the Electric Coin Company as an outside maintenance ‘body’ that is employed by the community to continue the development of Zcash. The Electric Coin Company will now be the beneficiary of a large chunk of the Founders Reward - a 10% tax for development - until the reward is set to end after the 2020 Zcash block reward halving.
Looking at data from Santiment, we can see that development has been very strong during 2019. The graph below shows ‘Development Activity’ in which we can see that the team has remained pretty busy during the entire year.
The 2020 Network Upgrade May Change Everything
ZCash is due a major overhaul during 2020 after the blockchains first block halving, scheduled for some time in December 2020. At block number 850,000 the block halving will occur and we will see the block reward for Zcash be reduced from 12.5 ZEC to 6.25 ZEC.
A block halving will effectively reduce the inflation seen within Zcash as the influx of supply is reduced by 50%. This will constrict the supply coming into the market which should, over the longer term, help to increase the price if the demand remains the same or increases.
However, the interesting thing about this specific block halving is that this should mark the end of the controversial Zcash Founders Reward!
The trouble with their Founders Tax
Since, its inception, Zcash has always had a Founders Reward in which 10% of all mined coins go straight to the founders, employees, advisors, the Electric Coin Company and the Zcash Foundation. This Founders Reward was set for the first few years and at the end of year 4 the Founders Reward was to be removed giving 100% of the mining reward back to the miners
The Founders Reward is important because it helps to maintain the future stability of the protocol and gives the developers of the project an important incentive to keep working honestly toward improving the protocol. In fact, Edward Sowden even holds a similar opinion on the topic;
Zooko Wilcox released a personal letter in July 2019 in which he expressed his hope regarding the possibility of a new ‘Zcash Dev Fund’. This Dev Fund will allocate coins from future block rewards for core support functions such as software development, user support, business development, etc. He expressed his hope that users would continue to hire ECG to do the work stating;
“As long as ECC still exists, and as long as you—the Zcash community—offer us the kind of funding necessary to do this job, we’re offering to take the job. We love Zcash, we’ve dedicated our lives to it, and we have the best track record in the industry.”
Blocktown Capital released a statement in which they suggest for the Founders Reward to be slashed in half. This suggestion is an interesting solution for Zcash as it would enable the continued development of Zcash but is also aimed to ensure stability, decentralization and network security. Blocktown also feels that this sets a strong precedent for future halvings - in which the Founders Fund could even be slashed in half once again for continued development.
As of August 2019 - the cumulative Founders Reward is estimated at 1.4 million ZEC. The reduction in Founders Reward by half would leave the developers with around $37 million per year, which is more than enough for the development team to continue to work.
ZCash (ZEC) Price Analysis
LONG TERM - DAILY CHART
What Has Been Going On?
Analyzing the long term daily chart above, we can see ZEC starting the year well as the bulls rebound from the February low of $45.98 and start their climb further higher. ZEC was able to slowly grind higher through March and April, being able to break above resistance at the 100-days EMA and reach a high of around $75.
During June 2019, ZEC surged much further higher, breaking above the 200-days EMA to reach the 2019 high of around $123. Realistically, this was a short spike higher and ZEC was unable to close above the $115 region.
Zcash went on to fall significantly from here, collapsing beneath support at the $100 and both of the 100-days and 200-days EMAs during July alone! ZEC went on to fall much further lower until support was found at the $33 level during September. Since reaching this support, ZEC has rebounded to the current trading price of $37.54.
Are We Bullish Or Bearish (as of November 2019)?
We are currently within a neutral trading condition for ZEC as of November 2019. For this market to be considered as bullish in the short term, we would need to see a break of ZEC above the $46 level. For this market to be considered as bullish over the longer term, we would need to see ZEC climbing higher above the $75 level.
If the sellers were to push ZEC beneath the support at the $33 level, the market would turn bearish and this could invalidate my 2020 price prediction. Support beneath $33 can be found at $30 and $28.22.
Where Is The Resistance On The Way Up TO $150?
On the way up toward my 2020 prediction of $150, ZEC must first break above the immediate resistance at $40. This is followed by strong resistance at $45, which is provided by the 100-days EMA, and at $50.
If the bulls break above $50, resistance can then be found at $58 (200-days EMA), $60, and $64.02 which is resistance provided by the short term bearish .382 Fib Retracement. Higher resistance can then be found at $70, $73.65 (bearish .5 Fib Ret), $83.28 (.618 Fib Ret), $90, $96.99 (.786 Fib Ret), and $100.
Beyond $100, we can expect resistance at $105, $110, and $115. The resistance at $115 had proved difficult for ZEC to close above during June and expected to be just as difficult moving forward. Above $115, resistance can be found at $120, $129.47 (long term bearish .5 Fib Retracement), $132.99 (1.272 Fib Extension), $140, and $143.81 (1.414 Fib Extension). If the buyers can clear this level of resistance, they will be free to make an attempt at my 2020 target of $150.
Conclusion
Zcash has a very strong potential to rise by a significant 300% from the current price and meet my 2020 prediction of $150 at some point in 2020. The project has a very strong team of developers are actively keeping the protocol private and secure. The project will undergo a very important upgrade in 2020 after the blockchain reaches the 850,000th block and initiates a block reward halving. This will constrict the supply on the market and could even potentially lead to a new Founders Reward structure which should improve decentralization.
To reach the $150 level, ZEC will firstly need to overcome resistance at $50, $64, $83, and $100. Above $100, strong resistance is located at $115, $129, $134, and $143. If the buyers can clear these levels, they will be free to make an attempt at the $150 target level.
