Zcash - Issue #63
Zcash - Issue #63
In this newsletter, we are profiling Zcash [ZEC]. In previous newsletters, we have profiled Bitcoin, Cardano, Stablecoins, Uniswap and many others. Access all our newsletters in our archives at madcapx.substack.com.
The Short of It
Of the top coins only a few have low max supply. Many max out into the billions but Zcash like Bitcoin has only a 21 million maximum supply. It is #73 on CoinMarketCap. It started with rave reviews but does not have the staying power against big brother BTC and has been on a slide since launch.
Profiling
Zcash was launched back in 2016 and was initially a fork of the Bitcoin source code. It was created by entrepreneur and cypherpunk Zooko Wilcox-O'Hearn (of the Electric Coin Company). The project's primary focus is providing a decentralized cryptocurrency with low fees that also allows true privacy and anonymity.
The ecosystem’s coin, ZEC, has a total supply of 21 million, just like Bitcoin. Also, consensus is achieved via Proof-of-Work. When a new block is mined, 80% goes to the miner, and 20% is split between the founders and employees of the Zcash Foundation, which helps fund continued development. Transaction speeds, at about 27 per second, are better than what can be had with standard Bitcoin.
Zcash utilizes something called zero-knowledge proofs (zk-SNARKs) to ensure anonymity. The network lets you choose whether to use public addresses (called “t-addresses”), which are transparent or private addresses (called “z-addresses”). These two address types are fully interoperable. When a private address is used, the fact that the transaction has happened is recorded on the readable ledger, but the sending and receiving addresses and the amount sent cannot be seen by the public.
Some interesting features of Zcash include the ability to add encrypted messages to your transactions, optionally provide payment disclosures to third parties, and transaction expiration which will cancel the transaction if it does not get added within a certain number of mined blocks.
In 2018, Zcash had some issues with a counterfeiting vulnerability that has since supposedly been fixed but has left a distrustful taste in some people’s mouths. It was also recently mentioned in their blog that they are planning to move to a Proof-of-Stake consensus mechanism, possibly sometime in 2024.
Competitors in the privacy crypto space are coins like Monero, Verge, and DASH. Although Zcash is one of the original privacy coins, it has not seen the growth and usage uptake that coins like Monero have enjoyed.
Trend Lines
This first Zcash chart has ZEC paired against BTC on a logarithmic weekly scale going back to late 2016. Over the last five years, ZEC has lost 99% of its value against Bitcoin, never coming out of a downward trend. Though there have been great opportunities to trade ZEC for gains such as the one in the chart of 316%, in the long run, it has been wiser to stay in Bitcoin for better profits. ZEC traded as high as 7.4 multiple of BTC in the first few days of release. It is currently trading at 0.002428 Satoshi. Unless ZEC can break out of this bear trend, it is best to look for short swing trade opportunities as it hits support lines.
The following chart has ZEC / USD paired on the weekly going back to late 2017 when the crypto space was finishing its last bull cycle. ZEC reached a high of $875 the first week of 2018 before crashing hard. Since then, we have had two more peaks that align well to a descending trend. Though if you bought at the low in 2020 and sold at the higher peak in 2021, the gain was 2208%. Currently, ZEC is in a support zone that could see a bounce of 140% back up to the resistance above or else it can lose that support area and head toward the lows hit in 2020 though unlikely to go that low, but that would be a loss of 81% from current price.
To learn more about Zcash check out this video by Naomi Brockwell.
The Other Trend Lines
ETH struggling to overcome the middle line of the blue channel. Support is the bottom line of the blue channel. — TradingView user nobleershad
ADA returns to strong support in area 1, I don't even want to think about a bearish break but I hope it can find the strength to rebound from this level — TradingView user Ale_IT
Bitcoin on the logarithmic weekly chart is in a bullish trend, but we are very close to the support line so keep a close eye on that. The current bottom trend line is $34,750, and the top resistance line is at $146,000. For this trend to break down, we need to close a weekly candle below the support.
When we zoom into the chart from the weekly above to the 4-hour below, we see how it already once bounced off the support. Keep an eye on how that holds or else we could break above the short-term bear trend and get a reversal in February / March to the upside.
Portfolios
This portfolio section gives you an idea of what sort of return you can get when investing in crypto assets.
BTC/USD FUND is up 247% since October 1st, 2020. Since this is a long-term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long-term hold position as our best stable alternative. This past week bitcoin has been ranging between $35,507 and $38,919 USD in value.
FUND 3 started on November 16, 2020, with $1000 USD in value and was invested into BTC, LTC, ETH, and ADA. The total amount of BTC value from the four coins has had a gain of 79% since the start. The USD fund value is up 301% since the beginning. We will hold these positions to see how well it does against our BTC-only portfolio. LTC is down -33% against BTC. ETH is up 150% against BTC since the start. ADA has a gain of 340% against BTC and 874% to USD.
BLWX Fund started on February 22, 2021. They all are assets we have profiled in the last few months, and we are interested in how they will perform in 2021 against BTC. BAT has a gain of 119% against BTC since the start; LINK is down -29%, WAVES is up 15%, XMR is down -9%. Overall, against BTC, the fund is up 24% and down -14% against USD.
Overall, Bitcoin should be your first choice as an investment in crypto, though many digital assets can give you amazing gains if you manage your risk. As a long-term investor, we see it as our largest portfolio investment. If you are a day trader, there are many great assets to put on your watch list. Look through our previous newsletters to find some.
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About
MadCapX research newsletter is written by the Madbyte Team. You can learn more about Madbyte and MadCapX on our websites.
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Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.