Zcash surged early on Aug. 24 after Grayscale advanced its effort to convert the Grayscale Zcash Trust into an ETF, with ZEC briefly reaching $885.42, its highest level since 2018.
According to CoinGecko, ZEC later pulled back to $844.24 at the time of writing, though it was still up 71.4% over the past seven days. The move lifted its market capitalization to $14.28 billion, making it the world’s 11th-largest cryptocurrency.
Fifth amended filing lays out The Zcash ETF
The main catalyst was Grayscale’s filing last Friday with the U.S. Securities and Exchange Commission. The asset manager submitted a fifth amended registration statement seeking to convert its existing Zcash trust into “The Zcash ETF” and set the annual management fee at 2.5%.
If approved, the product would become the first U.S. spot crypto ETF to directly track ZEC. Before the filing came to light, ZEC had already gained more than 30% over the week as bitcoin and the broader market moved higher.
Altcoin ETF launches have not matched bitcoin’s inflows
Several altcoin ETFs are already trading, including products tied to Solana (SOL), XRP, Litecoin, Doge, and BNB. Even so, the gap in investor inflows remains substantial.
SoSoValue data showed that over the past week, XRP ETFs brought in $40 million in net inflows and Solana ETFs drew $28 million. That was well below the nearly $2 billion taken in by bitcoin ETFs over the same period. Whether a Zcash ETF can stand out remains an open question.
Futures volume outpaced spot trading by a wide margin
Derivatives markets amplified the move. Coinglass data showed ZEC futures volume hit $9.5 billion in the 24 hours of the rally, far above the $1.06 billion recorded in spot trading.
Open interest climbed to $1.8 billion, or about 13% of ZEC’s market capitalization, showing that leveraged capital has become heavily involved in the current tug-of-war between longs and shorts.
DCG subsidiary also discussed a possible ZEC purchase
Another potential tailwind came from Digital Currency Group, Grayscale’s parent company. A previously amended filing disclosed that a DCG subsidiary is considering buying as many as 200,000 ZEC through the trust, a stake valued at about $164 million.
The discussion, however, remains non-binding at this stage.
Token has rebounded sharply from its June sell-off
The weekend rally also marks a sharp turnaround from Zcash’s steep decline in June. At that time, the development team disclosed a serious “counterfeiting” vulnerability in the Orchard shielded pool, a core mechanism in the Zcash network used to encrypt and conceal transaction details.
The disclosure sent ZEC down more than 60%, from $630 to $250. The flaw was later fixed through the NU6.2 network upgrade.
Compared with the June bottom, ZEC has now risen by more than three times and sits about 35% above its pre-drop level. Even after the latest jump, though, the token remains about 75% below its all-time high of $3,191.93 set in 2016.