The previous two 50% crashes were both caused by problems of our own making. This time, $ZEC is down 27%—what’s gone wrong?
On September 26, ZEC touched 1,698. Since then, it’s slid all the way back to around 1,230, down 27%. In my previous piece, I wrapped up ZEC’s story over the past year or so. The conclusion: two 50% crashes—one caused by people, the other by code. This time, I took a closer look at the people, the code, and the users.
🔍
The people who actually use it haven’t left. Coins held in shielded addresses are a sign that people are really using its privacy features. After a vulnerability came to light in June, around 750,000 coins were withdrawn from the shielded pool. About 80% of them have now returned. The pool holds 4.96 million coins, or 29% of all ZEC. More importantly, since the price peaked on September 26 and fell 27%, the number of coins in the shielded pool has actually risen by more than 60,000 (see chart). Speculators are leaving; users are adding more.
1️⃣ People: The team that resigned en masse in January hasn’t left Zcash. They founded ZODL and secured $25 million from investors including Paradigm and a16z to keep building the wallet and protocol.
2️⃣ Code: The next upgrade, NU7, is already running on the testnet, and block times are being cut from 75 seconds to 25.
📉 So what’s behind the drop?
Grayscale is too expensive. Grayscale’s ZEC ETF charges a 2.5% management fee—ten times that of BlackRock’s Bitcoin ETF. Since the peak, it has seen steady redemptions, with cumulative net inflows falling from around $270 million to $182 million. But on October 6, the Winklevoss brothers filed a new ZEC ETF application: a 0.25% management fee, just one-tenth of Grayscale’s. Their fund has also indicated it may buy up to $100 million worth (non-binding). Put simply: the expensive shop is losing customers, while a cheaper new shop has already applied to open.
📅 Three things to watch next:
· October 20: Will NU7 make it to mainnet as planned on November 5?
· Will outflows from Grayscale’s ETF stop? (On October 9, net flows were already zero.)
· Will the number of coins in the shielded pool keep rising?
My take: This time, what ZEC has lost is price, not its foundations. The people are still here, the code is being upgraded, and users are still depositing coins. The price will have to wait for capital to return; conviction is about these on-chain numbers that don’t lie.
When did you first start holding ZEC? Let’s talk in the comments 👇
$BTC
On September 26, ZEC touched 1,698. Since then, it’s slid all the way back to around 1,230, down 27%. In my previous piece, I wrapped up ZEC’s story over the past year or so. The conclusion: two 50% crashes—one caused by people, the other by code. This time, I took a closer look at the people, the code, and the users.
🔍
The people who actually use it haven’t left. Coins held in shielded addresses are a sign that people are really using its privacy features. After a vulnerability came to light in June, around 750,000 coins were withdrawn from the shielded pool. About 80% of them have now returned. The pool holds 4.96 million coins, or 29% of all ZEC. More importantly, since the price peaked on September 26 and fell 27%, the number of coins in the shielded pool has actually risen by more than 60,000 (see chart). Speculators are leaving; users are adding more.
1️⃣ People: The team that resigned en masse in January hasn’t left Zcash. They founded ZODL and secured $25 million from investors including Paradigm and a16z to keep building the wallet and protocol.
2️⃣ Code: The next upgrade, NU7, is already running on the testnet, and block times are being cut from 75 seconds to 25.
📉 So what’s behind the drop?
Grayscale is too expensive. Grayscale’s ZEC ETF charges a 2.5% management fee—ten times that of BlackRock’s Bitcoin ETF. Since the peak, it has seen steady redemptions, with cumulative net inflows falling from around $270 million to $182 million. But on October 6, the Winklevoss brothers filed a new ZEC ETF application: a 0.25% management fee, just one-tenth of Grayscale’s. Their fund has also indicated it may buy up to $100 million worth (non-binding). Put simply: the expensive shop is losing customers, while a cheaper new shop has already applied to open.
📅 Three things to watch next:
· October 20: Will NU7 make it to mainnet as planned on November 5?
· Will outflows from Grayscale’s ETF stop? (On October 9, net flows were already zero.)
· Will the number of coins in the shielded pool keep rising?
My take: This time, what ZEC has lost is price, not its foundations. The people are still here, the code is being upgraded, and users are still depositing coins. The price will have to wait for capital to return; conviction is about these on-chain numbers that don’t lie.
When did you first start holding ZEC? Let’s talk in the comments 👇
$BTC