Zcash climbed above $1,000 on 4 September, helping Grayscale’s recently launched ZCSH exchange-traded fund grow beyond $400m in assets less than two weeks after it began trading.
ZEC reached an intraday high of $1,050.70, rising by about 20% in 24 hours and almost doubling in value over the previous month.
The rally took ZCSH’s assets to $414.7m on 3 September, up from approximately $304.6m when the fund started trading on NYSE Arca on 25 August. Much of that increase was driven by the sharp rise in the value of ZEC inherited from the Grayscale Zcash Trust.
However, the fund has also increased its holdings. ZCSH held 387,849 ZEC at launch and 428,613 by 3 September, while the number of shares outstanding rose to 5.35 million.
The latest surge came as Bitcoin moved above $82,000 and ETH recovered the $2,500 level. Zcash’s advance was considerably stronger, with around $40m worth of short ZEC positions liquidated over a 24-hour period.
Those liquidations added to momentum that had already been building before the broader rise across the cryptocurrency market.
Leverage in Zcash trading has expanded alongside the price. Data from CoinGlass showed that open interest in Zcash futures exceeded $2bn for the first time, while 24-hour futures trading volume passed $6bn for the first time since the middle of August.
The figures indicate that traders are committing substantially more capital to ZEC derivatives as the cryptocurrency tests price levels it has not maintained for several years.
ZEC was worth about $40 a year ago. Its latest rise has taken it back into the 10 largest cryptocurrencies by market capitalisation for the first time since 2018.
The scale of the rally has prompted increasingly ambitious predictions about the coin’s future. Cryptographer Arjun Khemani said describing the move simply as a privacy-coin rally failed to capture the wider argument being made for Zcash.
He highlighted Zcash’s fixed supply of 21 million coins, its Bitcoin-like issuance schedule, a decade of distribution, work on quantum recoverability, plans to significantly increase transaction throughput and efforts to formally verify its shielded pool against undetectable inflation bugs.
Khemani said that “privacy is just one property of Zcash,” arguing that the broader question was whether ZEC could develop into a form of sovereign money.
The rally has also renewed debate about whether Zcash can become a lasting challenger to Bitcoin’s dominance of the digital-currency market.
Bitcoin represents about 93% of the market capitalisation of Grayscale’s Currencies Crypto Sector. Other alternatives, including Litecoin, have not seriously weakened that position. Even after increasing in value by about 19 times during the period examined in Grayscale’s latest research, Zcash remains worth less than 1% of Bitcoin.
Grayscale argues that Zcash may have a stronger chance than earlier challengers because it combines monetary characteristics similar to Bitcoin with technology that could become increasingly important as the cryptocurrency market develops.
Privacy is at the centre of that argument. Bitcoin transactions are permanently recorded on a public ledger. If an address is connected to a real-world identity, its balance and transaction history may be reconstructed.
Grayscale believes advances in artificial intelligence could make that process faster, cheaper and more widely available by improving address labelling and analysis of blockchain activity. The asset manager describes the change as the beginning of a third major period of concern about financial privacy, following the computerisation of financial records in the 1970s and the expansion of the internet in the 1990s.
Zcash uses a different model. Its shielded transactions rely on zero-knowledge cryptography to hide sending and receiving addresses, as well as transaction amounts. This allows users to retain Bitcoin-like scarcity without making each transfer permanently visible.
Grayscale argued that this difference could become more valuable as AI makes monitoring transparent blockchains increasingly sophisticated.
The asset manager’s case also includes what it calls several “second mover” advantages. These include active work to address emerging cybersecurity risks and cross-chain connectivity through intent-based technology. That technology could allow wallets or AI agents to transfer value between networks while using Zcash as a private settlement layer.
Those qualities form the basis of Grayscale’s view that Zcash could take market share from Bitcoin without matching its level of merchant adoption or liquidity.
The same privacy technology creates significant challenges. Shielded transactions can make sanctions screening, anti-money-laundering controls and the tracing of illicit funds more difficult. Such regulatory and compliance concerns have historically affected privacy-focused cryptocurrencies more heavily than Bitcoin.
Bitcoin continues to benefit from deep liquidity, established infrastructure, strong brand recognition and more than 15 years of network growth. Those advantages have helped keep it at the centre of the digital-currency market, leaving Zcash with a substantial gap to close.
Nevertheless, the move above $1,000 has given greater significance to Grayscale’s argument. The key test will be whether privacy and technological differentiation can deliver lasting gains in market share after the momentum behind the current rally fades.
Zcash was listed as up 4.05% over the previous 24 hours and ranked 10th by market capitalisation.
Oluwapelumi covers Bitcoin’s potential and writes about subjects including decentralised finance, hacks, mining and cryptocurrency culture, with a focus on the technology’s transformative power.
Gino Matos is a law school graduate and journalist with six years of experience in the cryptocurrency industry, primarily covering the Brazilian blockchain sector.
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