After Grayscale’s ZEC spot ETF went through a period of one-way expansion in the early stage, it recorded its first weekly net outflow exceeding $93 million. Assets under management have slipped from their peak to around $750 million. With an abrupt reversal in flows from off-exchange funds, the trading screen of $ZEC has quickly pulled back more than 20% from a high near $1,700. The liquidity premium that had previously been built up by relying on a single subscription channel is now undergoing its first pressure test since listing.
To a large extent, the prior rally was driven by passive buying concentrated in the ETF. The extremely high share of trading volume rapidly drained the depth of resting orders in the spot order book. However, once continuous net subscriptions came to an end in late September, the two-way nature of the liquidity mechanism became fully exposed. Combined with potential selling expectations within the market and sentiment disruptions, the market lacks sufficient spot-fund depth to absorb selling flows, and therefore tends to look more fragile when money exits.
At present, the ETF’s cumulative net inflow is still above $200 million, and the capital structure has not completely broken down. But within the remaining assets, how much is genuinely long-term positioning versus how much is waiting for an exit window has become the biggest point of contention right now. The key to what happens next hinges on whether spot-side buying can build a substantive backstop even as volume shrinks, and whether the speed of ETF outflows can quickly slow down, stabilize, and hold.
To a large extent, the prior rally was driven by passive buying concentrated in the ETF. The extremely high share of trading volume rapidly drained the depth of resting orders in the spot order book. However, once continuous net subscriptions came to an end in late September, the two-way nature of the liquidity mechanism became fully exposed. Combined with potential selling expectations within the market and sentiment disruptions, the market lacks sufficient spot-fund depth to absorb selling flows, and therefore tends to look more fragile when money exits.
At present, the ETF’s cumulative net inflow is still above $200 million, and the capital structure has not completely broken down. But within the remaining assets, how much is genuinely long-term positioning versus how much is waiting for an exit window has become the biggest point of contention right now. The key to what happens next hinges on whether spot-side buying can build a substantive backstop even as volume shrinks, and whether the speed of ETF outflows can quickly slow down, stabilize, and hold.