ZEC price by 20% per day due to FOMO PoS
Zcash (ZEC) is up nearly 20% in the past 24 hours, driven by the excitement surrounding the core protocol’s decision to move from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
ZEC price hit an intraday high of $ 188.8 after rising more than 27% for two consecutive days. ZEC’s upward move erased much of the damage it suffered earlier this week after a retreat in the broader market.
ZEC rises after lead developer Electric Coin Company (ECC) notification that they will switch from PoW to PoS within the next three years. The nonprofit stated that the upgrade will limit pricing pressures on ZEC by eliminating miners who “instantly liquidate” ZEC for Bitcoin or Fiat.
Josh Swihart, Senior Vice President of Growth at ECC said:
“This change will also increase the value of ZEC through capabilities, including generating profits through staking and a possible path to on-chain governance mechanisms for owners. Moving to PoS has other benefits, including reducing ZEC’s energy footprint, providing a workable path for on-chain governance mechanisms, and helping interoperability by solving problems including PoW transaction completeness issues.
Daily ZEC / USDT price chart | Source: TradingView
Unlike PoW, the PoS mechanism allows a miner or verifier to validate block transactions based on the number of underlying tokens they hold / use. In return, the so-called “validators” receive rewards in the form of winnings.
Ethereum, the leading smart contract platform by market capitalization, has also begun transitioning from PoW to PoS after launching a dedicated smart contract. In response, users blocked around 8.33 million ethers in so-called Ethereum 2.0 addresses and effectively pushed them out of a functioning supply.
Weekly framework ETH / USD price chart | Source: TradingView
The ECC announcement promises that users can put some of their ZEC holdings in a dedicated Zcash smart contract to become validators on the blockchain. As a result, due to the lockdown period, more ZEC can be withdrawn from circulation while they have their Bitcoin-like fixed supply of 21 million BTC.
Barry Silbert, Founder and CEO of Digital Currency Group – a venture capital firm that tweets that he would “buy more ZECs”, citing their supply limit. His tweet coincided with the sudden surge in the price of ZEC against the USD and Bitcoin.
– Barry Silbert (@BarrySilbert) November 20, 2021
However, some analysts believe that after the PoS implementation, Zcash will not have an offer cap.
For example, on-chain analyst Willy Woo noted in feedback said Silbert, if Zcash “can decide to extend the development tax” and “if it can switch to PoS and eliminate miners,” he believes ZEC has no maximum offer.
“And that ignores the 2018 inflation bug and assumes we can actually review the supply,” added Woo, referring to the well-known Zcash vulnerability that may have created the amount of ZEC infinitely.
A few minutes after Woo’s comment it was Silbert tweets: “Well, you all don’t like ZEC. I will definitely buy more. ”
ZEC. Price movement zone
ZEC’s recent foray has caused it to enter a turning point, with a defined trading range of $ 170 to $ 205 (red area in the graph below) that previously offered investors sales opportunities. More recently, after entering this range, ZEC price has declined while a prolonged decline towards the upward sloping trendline has been observed.
Three-day frame ZEC / USDT price chart | Source: TradingView
A clear breakout could emerge after ZEC closes above the turning zone accompanied by increased volume targeting fib retracement levels at $ 247 and $ 316. Conversely, a critical closing price below USD 170 can push the ZEC towards USD 136.
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According to Cointelegraph