On Monday, Zcash retreated from an eight-year high, shedding some of the gains from a rally that had seen the privacy-focused cryptocurrency surge over 55% in just days, after Grayscale converted its Zcash Trust into a U.S. exchange-traded fund.
Zcash ($ZEC) rose to over $880 on August 23 before pulling back slightly. The levels reached in recent days are the highest since 2018.
Prior to the decline, the token had gained roughly 66% over the week. However, it is currently trading around $814. The token's market capitalization exceeds $13.7 billion, ranking it 11th on Coinmarketcap's list by market cap.
Although the recent gains are still far from the all-time high of $5,941.80 reached in October 2016, trading volume is no longer as low as it was then.
About a year ago, $ZEC shares traded around $40, and the asset has come a long way since, appreciating over 1,805%.
Why a Privacy-Focused ETF Could Be a Breakthrough
The catalyst for the conflict was Grayscale's amendment to a registration statement filed with the Securities and Exchange Commission (SEC).
The asset manager wants the Zcash Trust to be listed on the NYSE Arca exchange under the ticker ZCSH as an exchange-traded fund (ETF). Trading in the shares is expected to begin around August 25, if Grayscale receives regulatory approval.
Clearing this hurdle would lead to the creation of the first U.S. ETF focused on privacy — an asset class that regulated products have largely avoided.
Zcash is known for its privacy features, as it uses zero-knowledge cryptography to conceal the sender, receiver, and transaction amount.
This design has made it attractive to investors seeking financial privacy. However, it raises concerns among regulators, who view it as a more complex tool to track for money laundering or sanctions evasion.
Grayscale's filing also discloses non-binding discussions in which DCG International Investments, a subsidiary of Digital Currency Group, may invest 200,000 $ZEC into the fund, worth roughly $110 million at the stated valuation. The asset manager reported that as of August 21, the trust's assets were approximately $263.5 million.
Crowdsourcing Used to Invest in $ZEC Futures
Buying shares wasn't the only action investors took regarding $ZEC. Open interest in $ZEC perpetual futures nearly doubled, from $962.5 million on August 19 to $1.8 billion by Monday.
Reportedly, the 24-hour trading volume reached $5.3 billion. The eight-hour average funding rate was 0.0106%, indicating traders paid a premium to maintain long positions.
Some market observers also note a broader cryptocurrency market rally, arguing the observed gains are market-wide. Bitcoin and ETH posted double-digit percentage gains. Bitcoin is trading around $80,000 following announcements of treasury buybacks and a wave of short liquidations.
Upcoming Coin Holder Vote
Zcash also had its own catalyst. A community vote on the upgrade to NU7, organized by Valar Group and Project Tachyon, will begin on August 25 and last approximately 18 days, concluding on September 14.
Eligibility criteria were set based on shielded $ZEC held in the Ironwood pool at the time of the network snapshot around 19:00 UTC on August 24, which may have prompted some holders to move funds to shielded balances.
The vote outcome could alter Zcash's issuance schedule, although available data does not show what portion of the price jump was due to voting-related transfers.
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