Zcash News Today: Zcash's Plunge Tests Grayscale ETF Hopes Amid Distribution Fears

Zcash (ZEC) plunged over 20% in 24 hours as technical breakdowns and cascade liquidations accelerated, testing critical support levels amid broader market volatility. The token, which had surged nearly 770% year-to-date, now trades near $364, down from a peak of $760 in October. Analysts attribute the selloff to a confluence of factors, including a 1.75 million HYPE token unlock by Hyperliquid, a data-center outage in Chicago that halted trading, and shifting sentiment around privacy-focused assets.

The technical breakdown of ZEC is underscored by its collapse below key Fibonacci retracement levels. The 0.236 and 0.618 levels, critical for trend continuation in bullish markets, have been breached, exposing support zones at $361 and $320. On-chain metrics reveal heavy net outflows of $39.34 million in November, signaling aggressive distribution by holders. Derivatives activity also shows a cooling trend, with open interest declining from a peak of $900 million to under $600 million, indicating reduced leverage appetite.

Meanwhile, the Hyperliquid token unlock-valued at $60.4 million-sparked fears of selling pressure, contributing to a 4.6% drop in HYPE's price. Arthur Hayes, founder of BitMEX, noted that while such unlocks are "priced in," the market's decline since September reflects broader skepticism about token utility and governance. Hyperliquid's airdrop model, which prioritized community distribution over venture capital, initially drove momentum but now faces scrutiny as token prices retrace.

Amid the turmoil, Grayscale's filing to convert its Zcash Trust into a spot ETF has emerged as a potential stabilizer. The move, which mirrors its successful Bitcoin and Ethereum ETF conversions, seeks to provide institutional-grade exposure to ZEC under the ticker ZCSH. Grayscale highlighted Zcash's "privacy-preservation" features as a strategic asset, though regulatory scrutiny of privacy coins remains a hurdle. The filing comes as ZEC has surged over 500% in two months, buoyed by renewed institutional interest, including Reliance Group's decision to shift its crypto portfolio entirely into Zcash.

The broader market context adds complexity. A 10-hour trading halt at the CME Group, caused by a data-center failure near Chicago, exacerbated volatility, forcing traders to adjust positions in cash markets. Traders noted thinner liquidity and wider spreads, compounding pressure on assets like ZEC that rely on stable derivatives activity.

Analysts remain divided on ZEC's near-term prospects. While some argue the $361 support level could catalyze a rebound toward $424 and $480, others warn of further declines to $280 if buyers fail to defend current levels. Vitalik Buterin's recent criticism of token-based governance has also raised concerns about long-term stability for privacy-focused networks.

Grayscale's ETF filing could prove pivotal. If approved, the product would offer a regulated avenue for traditional investors to access Zcash, potentially offsetting speculative selling. However, the 2.5% annual fee and reliance on in-kind share creation-currently delayed due to regulatory uncertainty-pose challenges.

For now, ZEC's trajectory hinges on whether institutional demand and technical resilience outweigh ongoing distribution pressures. As the token tests multi-week lows, market participants watch for signs of accumulation or a decisive break lower that could reshape its 2025 outlook.