Is Zcash in a bubble crisis? CryptoQuant CEO warns of the possibility of repeating the 2021 crash.

Privacy Coin Zcash (ZEC) has recently shown on-chain data indicating that it has entered an extreme bubble stage, with key trading indicators even surpassing the peak of the 2021 bull run. CryptoQuant CEO Ki Young Ju issued a stern warning, pointing out that the market is in a dangerous “distribution phase,” and retail investors may face a brutal fall similar to that of 2021. Although well-known figures like Arthur Hayes are optimistic about ZEC reaching $10,000, the data suggests that there may be significant risks hidden behind the current rise.

On-chain data raises alarm: Trading volume bubble chart reveals danger signals

The CEO of the cryptocurrency data analysis platform CryptoQuant, Ki Young Ju, recently released a significant analysis on the X platform, clearly illustrating the current dangerous state of the market through the “Zcash spot trading volume bubble chart.” The chart tracks the relationship between ZEC trading volume and price since January 2020, where the size of the circles represents trading volume, and the color reflects the rate of change in trading volume.

(Source: CryptoQuant)

The core of chart analysis lies in identifying the “distribution phase” - a typical characteristic at the end of a bull run, marked by unusually high trading volume but weak price rises. This phenomenon indicates that the market is undergoing a large-scale token “hand-over,” where experienced holders transfer their assets to new retail investors entering the market.

Ki Young Ju bluntly warned: “Sorry, but if you buy Zcash now, you are a retail investor.” This statement highlights the concern of professional analysts regarding the current market conditions.

The historical comparison is shocking: the current bubble size has exceeded the peak value of 2021

Data analysis shows that the scale of the bubble formed by the current trading volume and price trend of ZEC has exceeded the peak levels of the first half of 2021. Looking back in history, ZEC experienced a high turnover period of about six months at the beginning of 2021, during which the price surged to around 300 dollars per coin.

However, this distribution phase ultimately ended with a comprehensive market fall, resulting in significant losses for investors who bought in at the end of the rise. Current on-chain indicators suggest that a similar market scenario may be replaying.

If the entire cryptocurrency market is indeed at the end of its cycle, analysts warn that the possibility of repeating the collapse of 2021 is very high. This analysis based on historical patterns sounds the alarm for an overheated market.

Market Performance and Public Opinion: The Collision of Rational Analysis and Frenzied Predictions

Despite on-chain data issuing warnings, ZEC's market performance remains hot. In the past three months, the token has surged over 750%, a seemingly inexplicable rise that has also driven up the prices of the entire Privacy Coin sector.

The market frenzy is partly fueled by optimistic predictions from well-known figures. Arthur Hayes stated in a post on October 26 that he expects the ZEC price to rise to $10,000 per coin. When he made his prediction, the trading price of ZEC was around $308, and it has risen to around $328 as of this Tuesday.

This high-profile prediction further exacerbates the market's speculative enthusiasm, but stands in stark contrast to the risks revealed by on-chain data. The divergence of views between professional analysts and market opinion leaders poses a difficult choice for investors.

Industry Impact and Risk Transmission: The Chain Reaction of Privacy Coins

The unusual performance of ZEC has begun to create a ripple effect throughout the Privacy Coin sector. As the price of ZEC soars, similar privacy-focused cryptocurrencies have experienced varying degrees of rise, and market funds seem to be rapidly rotating between sectors.

This phenomenon of sector linkage is not uncommon in the cryptocurrency market, but it is worth noting that when leading varieties show signs of a bubble, it usually indicates that the entire sector may face adjustment risks. Investors need to be wary of sudden changes in market sentiment that could trigger a collective pullback.

Investment Insights and Risk Prevention: Data-Driven Decision-Making Wisdom

In the face of conflicting market signals, investors should maintain a clear mind. On-chain data analysis offers a market perspective different from price charts, revealing the true state of capital flows and holder behavior.

Professional investors usually pay more attention to these underlying data rather than simply chasing market trends. Retail investors often have disadvantages in terms of information acquisition and analytical skills, making them more likely to become bag holders during market distribution phases.

In the current environment, strict risk control measures are particularly important. This includes reasonable position allocation, setting stop-loss points, and avoiding blindly following market frenzy emotions. Historical experience shows that when on-chain data significantly diverges from market sentiment, trusting the data is often a wiser choice.

Conclusion

Zcash is at a crossroads of fate. On one side is the bubble risk revealed by on-chain data, and on the other side is the myriad predictions from market opinion leaders. This extremely polarized development outlook precisely reflects the high-risk characteristics of the cryptocurrency market.

For investors, it is more important to rely on data rather than emotions to make decisions at this moment. The objective evidence provided by on-chain analysis, while not as eye-catching as price predictions, often better reflects the true state of the market. In the enticing and risky world of cryptocurrency, maintaining rationality, respecting data, and strictly controlling risks are the keys to long-term survival.

As the market cycle evolves, Zcash will ultimately prove whose perspective is closer to the truth. Nevertheless, the current market conditions have already provided a vivid lesson in risk education for all participants.