If you want to read a summary of our most recent Zcash (ZEC) analysis and price predictions but don’t want to waste time scrolling past the introduction, click here.
Zcash is a cryptocurrency developed by the Electric Coin Company—formally called the Zcash Company. However, Zcash is more than another cryptocurrency; it is also a privacy coin.
Transactions with traditional cryptocurrencies like Bitcoin (BTC) or Litecoin (LTC) are not private. Home address, name, spending habits, and much more can be easily discovered by following the movement of money from user addresses on the most cryptocurrency networks.
Privacy coins seek to overcome these problems by integrating new innovations into the blockchain. Zcash was the first cryptocurrency to integrate zk-SNARKs into the blockchain. This allows users to choose between private shielded addresses or unshielded addresses.
There are several privacy coins on the market including Monero (XMR), Zcoin (XZC), Grin (GRIN), Beam (BEAM), Verge (XVG), and others.
Regular Analysis and Zcash Price Predictions
ZEC/USD has been trading along an upward facing support line since late March. Price increases accelerated in early April as part of a market-wide spike.
After reaching a high of $78 on Apr 3, Zcash began trading along a downward resistance line. Together the long-term support and short-term resistance generated a symmetrical triangle:
Based on our latest analysis, we predicted that price would continue trading within the triangle. Despite wick lows on Apr 11, our prediction was validated.
The price rose to $72.66 twice on Apr 11—creating an apparent double top pattern. Price drops led to lows under $70 at the time of writing this summary on Apr 13.
To read our full Apr 11 analysis and price predictions of Zcash, click on the green button below:
Zcash was the first privacy coin to introduce Zk-SNARKs into its network. This novelty has led to a lot of positive attention and overall growth for the coin. It was the third cryptocurrency listed on the Gemini exchange and is currently being accepted for Julian Assange’s legal defense.
However, the Founder’s Reward has caused controversy—even though Edward Snowden offered his praise of this “tax.”
In addition, there are many other privacy coins on the market with features that Zcash is lacking, and new privacy-based protocols like Mimblewimble are emerging.
As well, Ethereum has already experimented with the introduction of zk-SNARKs. Other cryptocurrencies might also follow suit—lessening the novelty of Zcash
In short, as more privacy coins emerge on the market, Zcash may face increased competition over the long term.
Zk-SNARKs is an acronym which stands for “zero-knowledge succinct non-interactive argument of knowledge.” While this may sound complicated, it simply means that users have the choice to hide their personal information—like one’s name or home address—during a transaction.
Types of Transactions on the Zcash Network
Using zk-SNARKs, a user shields their address. This means that all of their private information is theoretically hidden. Essentially, the buyer and seller only need to know the amount of the transaction—not the private information of the other party—to make a successful transaction.
However, private transactions using Zcash are optional. Furthermore, one party can choose to shield their address while the other does not. Thus, there are three types of peer-to-peer (P2P) transactions which can place on the Zcash network:
- Fully private transactions in which a P2P transaction occurs between two shielded addresses via the use of zk-SNARKs
- Partially private transactions in which a P2P transaction occurs between a shielded and unshield address—which does reveal private information about the buyer or seller
- Non-private transactions in which a P2P transaction occurs between two unshielded addresses.
Transactions between shielded addresses require greater time and RAM than between non-shielded address. For this reason, transactions on the Zcash network are often non-private.
Diminishing Competitive Advantage
Though Zcash is otherwise modeled after Bitcoin, the introduction of zk-SNARKs creates a significant difference between the two It appears that this is one of Zcash’s primary competitive advantages over Bitcoin (BTC), Litecoin (LTC), and other similar coins.
This competitive advantage is not likely to be permanent. For example, Ethereum integrated zk-SNARK technology into its network during the Byzantium hard fork. Other cryptocurrencies might do so as well.
If a number of cryptocurrencies emerge with zk-SNARKs and other innovative features, then the competitive advantage of Zcash is expected to diminish significantly.
Third on Gemini
Gemini was founded by Tyler and Cameron Winklevoss in 2014. In October 2015, the Winklevoss brothers launched Gemini as a Bitcoin exchange and custodial wallet. In 2015, it was licensed as a trust company by the New York State Department of Financial Services.
On May 6, 2016, Gemini became the world’s first licensed Ethereum exchange. Two years later, Gemini also became the world’s first licensed Zcash exchange. It received licensure in both cases from the NY Department of Financial Services.
Bitcoin Cash and Litecoin later joined this list. Gemini has also created the stablecoin Gemini Dollar (GUSD). This brought the total number of cryptocurrencies available on Gemini to only six.
Thus, being listed on Gemini is quite an achievement. The Winklevoss Brothers have gone to great extremes to ensure that Gemini is legally approved, licensed, and regulated. They have carefully selected a very small number of cryptocurrencies—all of which theoretically possess traits that make their exchange profitable for the long-term.
Furthermore, for a cryptocurrency to be regulated for an exchange means that that currency is at least recognized by a government agency. In other words, Gemini’s listing of Zcash in accordance with NY State regulations is an accomplishment that should not be understated.
The Founder’s Reward and Edward Snowden
Nonetheless, the Founder’s Reward has received quite a few critics, but there are also a few supporters—notably Edward Snowden.
Furthermore, However, rewarding initial contributors for their work is common in the digital asset industry. However, the incentive created by the Founder’s Reward will inevitably end leading to possible stagnation of Zcash’s development.
What Is the Founder’s Reward?
According to the Founder’s Reward, 10% of all Zcash coins will be distributed to the founders, employees, advisors, and employees of the Electric Coin Company. Similar to Bitcoin, 21 million coins are expected to be mined.
This means that 2.1 million coins should be distributed as part of the Founder’s Reward.
To accomplish this, the mining of Zcash is separated into two distribution periods:
- During the first four years, 50 Zcash coins will be mined every ten minutes. 80% of all newly mined Zcash will be distributed to the miners. 20%—or 2.1 million—will be distributed via the Founder’s Reward. This period began on Oct 28, 2016, and should end on Oct 28, 2020.
- At the completion of every four year period, 100% of all newly mined coins will be distributed to miners. The Founder’s Reward should effectively end.
The total number of Zcash coins mined will be cut in half every four years.
During the second four years, 25 Zcash coins will be mined every ten minutes while 12.5 Zcash coins will be mined every ten minuted during the third four year period. Following the first four years, 100% of all newly mined coins will be distributed to miners.
Detractors and Supporters
While the Founder’s Reward has been criticized for rewarding the founders with millions of dollars, many other centralized digital asset Foundations and Companies receive greater sums for their work.
For example, 12 million of the initial 60 million ethers produced were distributed to the Ethereum Foundation. This amount to 20% of the then-total supply of the currency while the Founder’s Reward is limited to only 10%
Some—including Edward Snowden—have praised the Zcash Foundation. He has called it a tax that enables the Electric Coin Company to discover vulnerabilities and prevent their exploitation.
He may right in his assessment. CEO of the Electric Coin Company Zoko Wilcox defines the purpose of the Founder’s Reward as such:
“the founders are incentivized to support Zcash for the long haul (at least for four years), and they have limited ability to pump-and-dump.”
The problem is that four years is not a very long time. While Wilcox might consider this the “long haul,” Zcash mining will continue until at least 2032—12 years after the Founder’s Reward ends. Without a consistent source of profit for contributing to the health, maintenance, and well-being of the Zcash network, continued development may stagnate.
By late 2020, the prevention of exploitation may be left up to members of the Zcash community, not the Electric Coin Company. If stagnation does occur and vulnerabilities exist as zk-SNARKs are integrated into other cryptocurrencies, Zcash’s popularity, success, and growth could begin diminishing by the early 2020s.
Saving Julian Assange?
In our fundamental analysis of Dogecoin, we explained that sign-value can help lead to the long-term success of a cryptocurrency. Sign-value is often created based on the external associations of an asset or commodity.
For example, Dogecoin is associated with a funny meme and has been referred to as “joke cryptocurrency.” Thus, Dogecoin possesses humor as a sign-value. By signifying humor, it has developed meaning beyond itself.
Associations can also be built when an asset or commodity becomes associated with a certain person or group of people. As mentioned above, Zcash has already developed associations with Edward Snowden.
Furthermore, Zcash became associated with Julian Assange and Wikileaks when Wikileaks began accepting donations for Assange’s legal defense in Bitcoin and Zcash. Assange—the founder of Zcash was arrested on Apr 11, 2019.
As a privacy coin, Zcash already has implicit associations with freedom and resistance against the financial system that requires the disclosure of personal information.
By building associations with Snowden, Assange, and Wikileaks, it becomes a possible sign of freedom and political resistance against authoritarian regimes, oppressive legal institutions, and social injustice.
In other words, Zcash is quickly becoming a sign of hope for leftists, revolutionaries, and those opposed to the current neo-liberal global status quo. This could catalyze a dedicated community to work toward the development of the Zcash network even after the Founder’s Reward ends.
Other Privacy Coins
Still, there are many other privacy coins—each of which might act as a competitor to Zcash. Monero, for example, is a privacy coin which integrates four technological innovations into the blockchain to ensure that every transaction is private.
Unlike Zcash, Monero does not offer users the option to make private or public transactions. This means that while Zcash transactions are only sometimes private, transactions on the Monero network are always private.
There are many other cryptocurrencies which integrate other privacy-based innovations into the blockchain. Verge takes advantage of TOR and the Dark Web while Zerocoin and PIVX have implemented the Zerocoin protocol.
Furthermore, Grin and Beam were developed using the Mimblewimble protocol. Members of the Litecoin Foundation has also announced the possibility of integrating Mimblewimble into Litecoin via a soft fork.
Privacy coins may have once been a novelty, but now some of the biggest cryptocurrencies including Ethereum and Litecoin are integrating privacy-based innovations. This is in addition to the many competitors which already exist.
In short, while Zcash has been able to demonstrate the success of zk-SNARKs and may develop sign-value within leftist organizations and social movements, it will only prove long-term vitality if it is able to demonstrate sufficient superiority over or differentiation from its competitors.
Now let’s take a look at our long-term technical analysis and see if we can predict prices in 2019, 2020, and beyond:
On Oct 30, 2016, Zcash (ZEC) opened at $950, before reaching a high of $2616 the next day.
A sharp drop ensued and the price made a bottom of $26.3 on Feb 23, 2017.
An uptrend followed shortly after. The price made a high of $779.26 on Jan 7, 2018. It has been decreasing since.
Since 2017, Zcash has experienced significant uptrend and downtrends. However, there is a pattern which we believe is likely to be repeated:
- First, the RSI makes a low. This occurs near the time the price makes a swing low.
- After a period of time, the price makes a lower low. This is combined with a higher low in the RSI.
- Lastly, an uptrend follows shortly thereafter.
The dates for this movement are presented in the table below:
|Timeframes||RSI Low (Date Experienced)||Low (Date Experienced)|
|February 13, 2017- February 23, 2017||$30.4 (Feb 13, 2017)||$26.3 (Feb 23, 2017)|
|November 24, 2018 -February 6, 2019||$64.7 (Nov 24, 2018)||$46 (Feb 6, 2019)|
The low of $15.52 on Mar 4, 2019 is considered insignificant since it did not occur in other exchanges. Therefore it is considered an anomaly that occurred only in Bitfinex and is not recognized in the rest of this analysis.
Not let’s take a look at this pattern and see if we can figure out what prices Zcash might reach over the next several years.
As part of this analysis, we seek to isolate similarities between these two movements within the technical indicators. To begin, we examine the similarly low relative strength index (RSI) ratings during each low.
The price of Zcash on Bitfinex is analyzed at one-day intervals from Oct 2016 to Apr 2019 alongside RSI in order to figure out where our current position is relative to 2017.
To better visualize large price fluctuations, logarithmic charts are going to be used in this analysis.
The lowest RSI recorded in 2017 was 25. This occurred on Feb 13, 2017. The lowest price in 2017 was recorded on Feb 23—10 days later—and was $26.3.
Similarly, an RSI of 22 was reached on Nov 24, 2018. The lowest price recorded was $46 on Feb 6, 2019
This may suggest that RSI may reach low levels below 25, shortly before reaching a low.
It is worth noting that the RSI dropped to 26 on Mar 15; however, the price did not make a low on that date or shortly after.
Therefore, we may have the first similarity between the low of 2017 and the current one:
Oversold RSI values(<30) were reached on the days that corresponded with a swing low, a period of time before the actual low was reached.
To determine what prices might be reached, we must determine the time tables during which the patterns we define might unfold. We do this by examining the time between the two lows.
The price made a low of $30.4 on Feb 13, 2017. This was the date with the lowest RSI value recorded. It made another low of $26.3 on Feb 23. This was the lowest price before the upward movement. It took 10 days for the price to create these lower lows.
The price made a low of $64.7 on Nov 24, 2018. This is the date with the lowest RSI value. It proceeded to make another low of $46 on Feb 6, 2019. This was the final low before the upward move. It took 74 days for the price to create these lows.
Comparing the length of these movements allows us to generate ratios that may help us in determining future prices and when they will be reached.
It took 10 days for the price to move from the first to the second low during 2017. During the 2019 movement, this period lasted 74 days. This gives us a rate of 7.4 (74/10).
We are going to make the assumption that movements in the 2019 upward move take 7.4 times longer than those on 2017.
Rate Of Change
To determine what prices might be reached, we also need to determine the relative magnitude of these two movements. In order to do that, we will look at the rates of decrease between the two lows in both dates.
The price made a low of $30.4 on Feb 13, 2017. It made another low of $26.3 on Feb 23. This is a decrease of 14%.
The price made a low of $64.7 on Nov 24, 2018. It proceeded to make another low of $46 on Feb 6, 2019. This is a decrease of 29%
Dividing the rates of decrease gives us a rate of 2.07 (29/14) Therefore, we are going to make the assumption that movements in 2019 are 2.07 times larger than those in 2017.
Now that we have a rate which converses the dates in 2019 to 2017 and a rate which does the same to the magnitude of increases and decreases, we can proceed to make our predictions.
ZEC Price Prediction 2019
In order to figure out the price at the end of 2019, will use the 7.2 rate of time and the 2.07 rate of price movement and apply to the date in the 2017 upward move corresponds to Dec 31, 2019.
On Apr 9, 2017, 45 days after the $26.3 low, the price reached a high of $78. Measuring from the $26.3 low, this is a 197% rate of increase.
Therefore, using the 7.2 rate for time movement and 2.07 rate of price movement, we will use a 408% increase from the $46 low on Feb 6, 2019. This gives us a price of around $175 on Dec 31, 2019.
However, there is a higher price reached before this. On Jul 21, 2019, the price will reach a high of $238.
ZEC Price Prediction 2020
In order to figure out the price at the end of 2020, will use the 7.2 rate of time and the 2.07 rate of price movement and apply to the date in the 2017 upward move corresponds to Dec 31, 2020.
On May 28, 2017, 96 days after the $26.3 low, the price reached a high of $203. Measuring from the $26.3 low, this is a 667% rate of increase.
Therefore, using the 7.2 rate for time movement and 2.07 rate of price movement, we will use a 1380% increase from the $46 low on Feb 6, 2019. This gives us a price of around $685 on Dec 31, 2020.
However, there is a higher price reached before this. On Nov 25, 2020, the price may reach a high around $733.
Summary 2019 and 2020 Analysis
There are several similarities between the first 2017 upward move and the current one in 2019.
- RSI levels below 25 are reached when the price makes a swing low.
- After a period of time, the price makes an absolute low.
- This is combined with higher RSI values than the original low.
- An uptrend begins.
The following predictions are made with the assumption that price will follow the pattern laid out in the previous correction and on the time tables we defined:
- The price should be trading around $175 in December 2019.
- The price should reach a high of $733 on Nov 25, 2020
- The price should be trading around $685 in December 2020.
Until these prices are validated, the patterns we define cannot be considered accurate indicators of future prices. Validation of these prices, however, would also validate the accuracy of the pattern we have isolated. At the end of 2019, we will return to these predictions to assess whether the pattern appears to be holding true or not.
Conclusion: 5 Year Price Prediction
Coming off 2020 on a high, we expect that Zcash (ZEC) will begin to slow down in following years as the project stagnates, potentially seeing ZEC dip back below $685 as other more active projects pick up the pace.
The Zcash foundation has recently been carrying out investigations into proof-of-stake, indicating a switch from its current proof-of-work consensus mechanism may be on the cards. However, with several other major cryptocurrencies considering the same, we do not expect this change will influence the ZEC price significantly.
While we can be certain that competition among privacy-coins will only intensify over the next several years, which coin ultimately becomes the people’s choice remains uncertain. Numerous privacy coins have risen and fallen since Zcash was launched, but few have gone as far Zcash.
Here at Bittabi, however, we can’t help but think that Zcash will begin to stagnate after 2020 as the core team loses its primary source of funding — the founder’s reward. With the core team out of the picture, Zcash will have needed to achieve self-sufficiency to survive with only community assisted development.