Zcash has made a retreat from an eight-year high on Monday, as it has shed part of the rally that saw the privacy coin go up by over 55% in days after Grayscale moved to convert its Zcash Trust into a US spot exchange-traded fund.
Zcash (ZEC) rose to over $880 on August 23 before easing. The figures it hit in the past few days are the strongest level it has attained since 2018.
Before it started dropping, the gains it had made over the week were around 66%. However, it is currently trading around $814. The token has a market cap of over $13.7 billion and sits at number 11 on Coinmarketcaps list of tokens ranked by market value.
While the recent rally is still a far cry from the all-time high of $5,941.80 that the token hit in October 2016, trading is not as thin as it was then.
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Roughly a year ago, ZEC was trading around $40, and it has come a long way since then, having risen by over 1,805%.
Why a privacy-coin ETF would break new ground
The move that lit the fuse was Grayscales amended registration statement with the Securities and Exchange Commission (SEC).
The asset manager wants Zcash Trust to be listed on NYSE Arca under the ticker ZCSH as an exchange-traded fund (ETF). The shares are expected to begin trading on or about August 25, should Grayscale get the regulatory sign-off.
Clearing that hurdle would produce the first US ETF tracking a privacy coin, an asset class regulated products have largely avoided.
Zcash has been known for its privacy features, as it uses zero-knowledge cryptography to hide a transactions sender, recipient, and amount.
This design has made it appealing to investors who want financial privacy. However, it has been worrying for regulators who see it as a harder-to-trace vehicle for money laundering or sanctions evasion.
Grayscales filing also disclosed non-binding talks under which DCG International Investments, a Digital Currency Group subsidiary, could seed the fund with 200,000 ZEC, a stake worth roughly $110 million at the cited valuation. The asset manager said the trust held about $263.5 million in assets as of August 21.
Leverage crowds into ZEC futures
Buying alone was not the only action investors were carrying out with respect to ZEC. Open interest in ZEC perpetual futures nearly doubled from $962.5 million on August 19 to $1.8 billion by Monday.
The 24-hour volume reportedly hit $5.3 billion. The average eight-hour funding rate stood at 0.0106%, which is a sign that traders were paying up to stay long.
Some market observers have also pointed out that there is a general rally in the crypto market, stating that the growth that is being witnessed is market-wide. Bitcoin and ETH have both risen by double-digit percentages. Bitcoin is currently trading close to $80,000 after a Treasury bond-buyback announcement and a wave of short liquidations.
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An upcoming coinholder vote
Zcash also had its own catalyst. A community vote on the NU7 upgrade, organized by Valar Group and Project Tachyon, opens August 25 and runs about 18 days, closing September 14.
Eligibility was set by shielded ZEC held in the Ironwood pool at a network snapshot around 19:00 UTC on August 24, which may have nudged some holders to move funds into shielded balances.
The ballot could reshape Zcashs issuance schedule, though available data does not show how much of the price jump came from voting-related transfers.