ZCash (ZEC) increased by over 10% mainly due to speculative money flowing into perpetual futures contracts, while the spot market withdrew capital, increasing the risk of a downward reversal.
The single increase of ZEC stands out among assets in the same segment, but the divergence between derivatives and spot often leads to unsustainable trends. Indicators such as Open Interest, Funding Rate, netflow spot, and liquidation heatmap are showing that the current price pull is more speculative than actual buying demand.
MAIN CONTENT
ZEC surged as Open Interest and Funding Rate in the perpetual market rose together, indicating Long positions are dominant.
Large net selling by spot traders makes the speculative-driven upward momentum fragile in the absence of spot buying force.
The liquidation heatmap indicates a large liquidity cluster below the current price, highlighting the risk of sliding towards the 350 USD area.
Speculation in perpetual is driving ZEC's upward momentum.
ZEC increased by over 10% in 24 hours and regained the 384 USD mark, mainly thanks to inflows into perpetual futures as Open Interest rose and the Funding Rate remained positive.
The clearest momentum comes from the perpetual futures market: Open Interest (OI) and Funding Rate are rising simultaneously. OI reflects the total capital that is 'open' in perpetual contracts, while the Funding Rate indicates which side must pay fees to balance the market when positions are skewed.
An increase in OI often means new capital is entering, which can serve both Long and Short scenarios. However, a positive Funding Rate typically indicates that buyers (Long) are paying fees, meaning the Long side is dominant and willing to pay a 'premium' to maintain positions when prices are moving in their favor.
In ZEC's case, approximately 71.26 million USD flowed into the perpetual market, while the Funding Rate was around 0.0061% and remained positive. This implies that most new open contracts at the time of recording came from the Long side, thereby amplifying the impact on short-term price volatility.
Spot investors withdrawing capital undermine the sustainability of the trend.
Despite the explosive derivatives market, ZEC's spot cash flow tilted towards net selling in 48 hours, indicating that the spot buying force does not support the bullish narrative.
The net flow data for spot tracks the balance of inflows/outflows on exchanges, indicating a clear trend towards outflow in the last 48 hours. When outflows dominate in the context of rising prices, this often reflects distribution or profit-taking activities in the spot market.
The total spot sell value during this period reached approximately 31.37 million USD, equivalent to spot traders having 'dumped' about 44% of the new liquidity entering the perpetual market. This capital withdrawal makes the bullish structure more reliant on leverage and short-term expectations.
History shows that upward movements largely depend on speculative activity lacking accompanying spot demand, often becoming fragile when downside risks increase. Without a return of spot buying force, ZEC may face adjustment risks and general market sentiment may deteriorate.
The liquidation heatmap is leaning towards a scenario of decline towards 350 USD.
The liquidation heatmap currently shows a large liquidity cluster below the ZEC price, increasing the probability that the price will 'suck' towards a higher liquidity zone, particularly around 350 USD.
The liquidation heatmap is a useful tool for assessing the likelihood of prices continuing to rise or reversing downward. This map shows liquidity clusters above/below the current price level with varying intensities, often representing areas that could trigger liquidations or attract significant volatility.
In the current context, the most significant cluster lies below ZEC's price range, implying room for a broader decline to test the area around 350 USD. You can directly track the data at the ZEC futures contract heatmap on CoinGlass.
Liquidity clusters do not 'guarantee' the price direction, but the increasing divergence between the behaviors of spot and perpetual raises the probability of a downward reversal, especially when Long leverage becomes crowded and vulnerable to liquidation.
Final assessment
ZEC is surging strongly thanks to speculative liquidity, as shown by the inflow of capital into the perpetual market and the positive Funding Rate. However, selling pressure in the spot market undermines the 'real demand' foundation, making the trend vulnerable if the overall market fluctuates or Long positions are liquidated in chain.
Frequently Asked Questions
What do increasing Open Interest and positive Funding Rate indicate for ZEC?
An increase in Open Interest indicates new capital entering the perpetual market, while a positive Funding Rate reflects that the Long side is paying fees to maintain positions. Combining these two factors often implies that the current upward momentum is driven by leveraged Long positions.
Why can net selling in the spot market make ZEC more susceptible to adjustments?
When spot withdraws capital or sells net during price increases, the spot buying force is insufficient to provide support. Movements that primarily rely on derivatives are often weak and can easily reverse when sentiment shifts or when Long positions are liquidated.
What does the liquidation heatmap suggest about ZEC's price risk?
The heatmap shows a significant liquidity cluster below the current price, highlighting the risk of prices being pulled towards larger liquidity zones. In the current data, the area of interest is around 350 USD, although this is not a certain level.
Source: https://tintucbitcoin.com/zcash-tang-10-zec-co-dau-co/
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