Grayscale’s spot Zcash ETF (ZCSH) recorded its first weekly net outflow since listing: $93.56 million for the week ending October 2. Just two weeks earlier, the fund was the biggest draw for crypto ETFs.
The timeline makes things much clearer. ZCSH listed on NYSE Arca on August 25, and still had $98.2 million in net inflows for the week ending September 18, the most among its peers. This outflow wiped out about 30% of its cumulative net inflows since listing, taking them from roughly $268 million to about $213 million. AUM shrank from a September peak of around $915 million–$979 million to about $751 million. On a daily basis, there were $30.25 million in redemptions on September 30 and $26.93 million on October 2, with no net inflows on any day since September 22. Meanwhile, $ZEC was trading at around $1,300–$1,308, down about 17.5% for the week and roughly 23% from its recent high of around $1,690.
My take: I’m inclined to see this as profit-taking rather than “a collapse in institutional demand for privacy coins.” The reason is that the outflows were heavily concentrated in the two weeks after the price surged, while $ZEC is itself a highly volatile asset that fell from $1,690 to $1,300. ETF redemptions accompanying a 23% pullback aren’t unusual. But there’s an important structural asymmetry to point out: at one point, the fund held nearly 3.5% of the total supply of $ZEC . When it’s consistently receiving net subscriptions, it’s a source of buying pressure; once it becomes a sustained source of redemptions, that same holding automatically turns into a source of natural selling pressure, with a nonlinear effect on the price. Also, don’t forget that trading in the 3-for-1 stock split only began on September 30, and a 2.5% fee isn’t cheap for long-term holders.
That’s why this week’s data (for the week of October 6) will be the turning point: a return to net inflows would suggest a shakeout; continued outflows would suggest institutions are pulling back their exposure.
What do you think—is this routine profit-taking amid a broad downturn in crypto ETFs, or are institutions beginning to cut their exposure to privacy coins specifically?
#ZcashSpotETFSeesFirstWeeklyOutflowOf$93.6Million
The timeline makes things much clearer. ZCSH listed on NYSE Arca on August 25, and still had $98.2 million in net inflows for the week ending September 18, the most among its peers. This outflow wiped out about 30% of its cumulative net inflows since listing, taking them from roughly $268 million to about $213 million. AUM shrank from a September peak of around $915 million–$979 million to about $751 million. On a daily basis, there were $30.25 million in redemptions on September 30 and $26.93 million on October 2, with no net inflows on any day since September 22. Meanwhile, $ZEC was trading at around $1,300–$1,308, down about 17.5% for the week and roughly 23% from its recent high of around $1,690.
My take: I’m inclined to see this as profit-taking rather than “a collapse in institutional demand for privacy coins.” The reason is that the outflows were heavily concentrated in the two weeks after the price surged, while $ZEC is itself a highly volatile asset that fell from $1,690 to $1,300. ETF redemptions accompanying a 23% pullback aren’t unusual. But there’s an important structural asymmetry to point out: at one point, the fund held nearly 3.5% of the total supply of $ZEC . When it’s consistently receiving net subscriptions, it’s a source of buying pressure; once it becomes a sustained source of redemptions, that same holding automatically turns into a source of natural selling pressure, with a nonlinear effect on the price. Also, don’t forget that trading in the 3-for-1 stock split only began on September 30, and a 2.5% fee isn’t cheap for long-term holders.
That’s why this week’s data (for the week of October 6) will be the turning point: a return to net inflows would suggest a shakeout; continued outflows would suggest institutions are pulling back their exposure.
What do you think—is this routine profit-taking amid a broad downturn in crypto ETFs, or are institutions beginning to cut their exposure to privacy coins specifically?
#ZcashSpotETFSeesFirstWeeklyOutflowOf$93.6Million