Ideal for high-traffic applications

Zilliqa is a blockchain platform designed to encourage a distributed global network of computers to run decentralized applications. It aims to enhance user scalability through sharding. Zilliqa offers features similar to other cryptocurrency projects, such as smart contracts, transaction processing, and token issuance. However, it is particularly suitable for products and services that may experience high levels of activity.

Launched in June 2017 by Amrit Kumar and Xinshu Don, Zilliqa differs from Bitcoin by enabling faster transactions. It allows developers to use its proprietary language, Scilla, and employs a sharding process that divides its infrastructure into interconnected blockchains to handle more transactions.

Zilliqa enables users to build user-friendly decentralized apps (dApps) and is one of the fastest-growing blockchain ecosystems. The ZIL token serves as the native currency for the Zilliqa blockchain, designed to support and scale decentralized applications, including financial services and NFT marketplaces.

By holding ZIL, users can interact with any dApp or service built on the Zilliqa blockchain and participate in network governance by voting on upgrades. Despite Zilliqa (ZIL) having dropped more than 30% since April 23, further declines remain a possibility.

U.S. consumer prices rose at a slower pace

This Wednesday, the cryptocurrency market showed a slight recovery after the U.S. reported that the Consumer Price Index (CPI) increased by 4.9% year-over-year in April, lower than the expected 5% rise. Analysts believe this news indicates the Federal Reserve is making progress in its battle against inflation. However, inflation still remains significantly above the Fed’s target, and the journey toward 2% inflation is likely to be challenging.

“I wouldn’t call this a clear bullish report, but it gives some people the argument to call for a pause or shift in policy from the Fed. I don’t think we’ll see that. I believe the Fed will raise rates again in June and then pause. No pivots in 2023.”

– Kenny Polcari, Chief Market Strategist, Slatestone Wealth

With federal funds now at 5% to 5.25% (the highest since January 2006), expectations are building for an economic slowdown in the coming months, which will likely affect corporate earnings.

The primary concern is how long the Fed will maintain restrictive policies. If company earnings continue to fall short of expectations, the market may react strongly.

Tighter credit conditions for businesses and households are expected to depress economic activity. Renowned investor Jeremy Grantham has warned of significant losses in U.S. stocks soon.

Stocks are not the only assets that might face substantial losses, and cryptocurrencies could potentially experience even larger declines. The crypto market has demonstrated a strong correlation with U.S. equities, meaning any downturn in the stock market will likely be mirrored in the crypto space.

The upside potential for Zilliqa (ZIL) seems limited, and traders should closely monitor Bitcoin, considering a short position toward lower levels.

Technical overview for Zilliqa (ZIL)

Zilliqa (ZIL) has fallen from $0.036 to $0.022 since April 23, 2023, with the current price at $0.024. Zilliqa (ZIL) may struggle to maintain levels above $0.020 in the coming days. A breach below this level would suggest a further decline, potentially targeting $0.018.

Key support & resistance levels for Zilliqa (ZIL)

In the chart below (starting from July 2022), I’ve highlighted key support and resistance levels to guide traders in understanding possible price movements. Zilliqa (ZIL) remains under pressure, but if it surpasses the $0.030 resistance level, the next target could be $0.035.

The current support is at $0.020, and a break below this would signal a “SELL” opportunity, potentially driving the price down to $0.018. A drop under $0.015, an important psychological support level, could see the price target move as low as $0.010.

Factors that suggest a rise in Zilliqa (ZIL) price

Cryptocurrency markets have struggled in recent days, with traders remaining uneasy after the Federal Reserve raised interest rates by 25 basis points on May 3.

Fed Chair Jerome Powell mentioned uncertainty about the duration of the rate hike cycle, but any signs that the Fed may become less aggressive are seen as favorable for cryptocurrencies.

Traders should also note that Zilliqa’s price tends to be correlated with Bitcoin’s performance. If Bitcoin’s price rises above $30,000 again, Zilliqa (ZIL) may see a price surge as well.

Signs pointing to further decline for Zilliqa (ZIL)

Despite Zilliqa (ZIL) dropping more than 30% since April 23, market participants should brace for another potential downturn.

The macroeconomic environment remains uncertain, with policy tightening aimed at controlling high inflation, deteriorating financial conditions, and ongoing global disruptions from Russia’s invasion of Ukraine.

The current support for ZIL is at $0.020; if this level is broken, the next targets could be $0.018 or even lower.

What experts and analysts are saying?

The upcoming weeks could be challenging for Zilliqa (ZIL), as the outlook for risk appetite remains bleak. The macroeconomic landscape is volatile, and the crypto industry continues to face significant regulatory pressure in the U.S.

ShapeShift CEO Erik Voorhees stated that the battle between the U.S. government and the crypto industry is just beginning. Crypto market sentiment has been dampened again, and for now, indicators suggest that Zilliqa (ZIL) may see new lows in the near term.

Since the April 23 peak, there has been a notable decrease in whale transactions on the Zilliqa network. When whales reduce their trading activity, it typically signals a loss of confidence in the short-term price outlook for the coin.

Ki Young Ju, CEO of CryptoQuant.com, commented that macro risks and contagion still dominate the crypto industry, and the growing risks of further liquidations and bankruptcies could trigger another surge in selling pressure.

Izjava o odricanju od odgovornosti: Cryptocurrencies are highly volatile and may not be suitable for all investors. Only invest what you can afford to lose. This information is for educational purposes and should not be taken as financial or investment advice.