Zcash price could be on the verge of a major crash after confirming a highly bearish pattern, just days after surging nearly 850% from its October low.

According to data from crypto.news, Zcash (ZEC) price rallied over 850% from $76 recorded on Oct. 1 to $734.96 on Nov. 8, its highest level in the past 7 years. The privacy coin has since dropped by 30% and was trading at $512 at press time.

The Zcash price surge over the past couple of months was driven by multiple catalysts, including rising investor demand for privacy-focused cryptocurrencies amid growing surveillance concerns and mounting regulatory pressure on transparent blockchains like Bitcoin. Peers like Monero (XMR), Railgun (RAIL), and Dash (DASH) had also benefited from this demand and were up 24%, 31% and 49% respectively.

Its recent gains have also been supported by strengthening fundamentals within the Zcash network. Data from the Zcash dashboard show that 30% of the total ZEC supply, or around 4.83 million tokens, is now stored in shielded pools, nearly a 60% increase over the past month. These shielded pools rely on zk-SNARK cryptography to enable fully private transactions.

However, at press time, market sentiment surrounding Zcash appears to be tilting bearish, as observed by a notable drop in futures activity. Data from CoinGlass show that the open interest on ZEC futures has dipped 28% in the past 24 hours, hovering around $846 million at press time. Falling open interest points to traders closing out positions and can indicate a lack of conviction in ZEC’s current price trend.

Additional data show that the long-to-short ratio has dropped below 1, indicating a growing number of traders seem to be now betting on a price drop ahead rather than gains. This could stir up more bearish sentiment within the Zcash community and put additional pressure on the token’s price over the coming days.

Zcash price analysis

On the 4-hour chart, Zcash price has confirmed a breakdown from a double top pattern, which tends to hint at an upcoming drop in technical analysis.

The neckline of the pattern lies at $503.42, while the two tops are at $749 and $683, respectively.

Momentum indicators are also flashing bearish signs, supporting the case for further downside. The MACD lines have pointed downwards with a widening gap as bears take greater hold over the market. Meanwhile, the RSI is also moving lower and still has room to fall before reaching oversold territory.

As such, Zcash price could drop toward the $400 psychological support level, which also aligns with the 50% Fibonacci retracement level on the chart.

A decisive breach below this could fuel a drop towards $256.41, a target derived by subtracting the height of the double top pattern from the price market by the neckline of the pattern. At press time, this level lies roughly 50% below the current price.

On the flip side, a rebound back above the $600 psychological resistance area would invalidate the bearish setup and would mean a potential recovery.