A significant market divergence is defining the current cycle as capital rotation into risk assets remains extremely aggressive. According to reports from AMBCrypto, every major U.S. equity closed the week at fresh all-time highs, with the S&P 500 up +18% in just eight weeks while the Dow continues printing new all-time highs. In contrast, the total crypto market is up only 10%, with most major assets still trading well below previous cycle highs. This divergence raises questions about whether the ongoing capital rotation could still benefit digital assets, particularly as U.S. President Donald Trump's public celebration of the equity rally symbolizes where capital flows are currently directed.
The crypto market has clearly shifted back into a risk-off environment following Bitcoin's near 10% correction in less than two weeks, with the price losing the ₹77,000 level. As reported by AMBCrypto, the market still does not appear fully bottomed yet, with capitulation risk continuing to rise after the latest broad market flushout. Nearly $60 billion has exited crypto, confirming a broader move back into risk-off behavior. The Crypto Fear & Greed Index has dropped back into the 'fear' zone, marking its sharpest pullback since early April, indicating deteriorating market sentiment.
Zcash (ZEC) is currently trading above $600 amid mixed trader sentiment and conflicting analyst opinions. According to CoinMarketCap, ZEC dropped 4.36% over the last 24 hours to around $634 while Bitcoin remained mostly flat. Analyst Scott Melker has pointed to a large bearish divergence on ZEC's daily chart, suggesting the asset may be overbought, while some traders are warning against entering after the recent surge. The cryptocurrency is struggling near the important $690–$700 resistance zone, which previously triggered a strong rejection in November 2025, with analysts suggesting potential downside toward the $564 support area if ZEC fails to reclaim the $664 level.
Despite short-term caution, some analysts believe ZEC's overall structure still looks positive, with institutional activity beginning to recover after falling during the previous correction. According to analyst Ardi, the recent rebound toward $680 appears to be driven by mid-sized investors and institutional flows rather than retail traders, with institutional buying potentially improving significantly if ZEC moves back above the November high region near $640. More bullish sentiment has emerged after Multicoin Capital co-founder Tushar Jain discussed the firm's Zcash investment, citing improving infrastructure, stronger adoption, and renewed interest in crypto privacy. Digital Currency Group founder Barry Silbert has also described ZEC as "becoming a quantum play," creating a new narrative around the asset.
Macro volatility is already weighing heavily on crypto sentiment, with the SEC effectively pausing the much-anticipated 'innovation exemption' proposal that could have accelerated institutional adoption of U.S.-based tokenized equities. According to AMBCrypto, against this backdrop, stronger capital flows into U.S. equities could further weaken liquidity conditions for crypto. The market is effectively brushing off macro headlines including the Iran conflict, Strait of Hormuz risks, sticky inflation, and Fed narrative, demonstrating the strength of current equity market momentum. The Iran war backdrop remains the single dominant macro force, with oil prices pulling back from four-year highs on brief deal optimism but remaining near $98–105 as traders price in a prolonged partial Hormuz disruption.
