The Grayscale Zcash ETF Lost $14.6 Million in One Day. Is That Why ZEC Can’t Hold $1,000?

The Grayscale Zcash ETF (NYSEARCA: ZCSH) experienced a significant net outflow of $14.6 million. The fund had no outflows on November 10 and reported $2.2 million in outflows on November 9.

Currently, Zcash (CRYPTO: ZEC) is priced at $951, down 4.7% in 24 hours and 23.8% over the past week. This downturn has pushed the coin back below the $1,000 threshold, despite Grayscale’s announcement that the number of active Zcash developers has doubled over the last two years.

Zcash also fell notably on November 10, a day when the fund had no outflows. So, is the Grayscale Zcash ETF responsible for ZEC’s inability to hold the $1,000 mark, or is it merely a scapegoat for selling that happened elsewhere?

The $14.6 Million Outflow Only Shows What Fund Investors Did

Net flow measures the money entering a fund minus the money leaving it on a single trading day. A negative figure indicates the fund had to redeem shares, meaning Grayscale sells ZEC to provide cash to investors withdrawing funds. Traders typically interpret significant outflows as increased supply hitting the market.

However, the $14.6 million outflow is just one figure and doesn’t clarify whether a single large investor withdrew funds or numerous smaller investors opted out. Grayscale does not disclose specific reasons for redemptions. Additionally, fund flows often follow price trends, so the November 11 outflow could reflect prior drops rather than cause further declines.

The daily closing prices support this analysis. Zcash closed at $1,162 on November 9, dropped to $1,044 on November 10, and ended at $962 on November 11. The sharpest decline, 10.2%, occurred on November 10, despite no fund flows that day. Trading volume on November 10 and 11 was the highest since November 3, suggesting much of the selling was driven through exchanges.

Most ZEC trading occurs on exchanges, where transactions do not touch the fund. In early October, the fund recorded around $59 million in outflows, yet Zcash continued to rise as buyers on exchanges absorbed those coins.

Zcash Trades Below Its 20-Day and 50-Day Averages After a 23.8% Weekly Drop

On November 12, Zcash has remained under $1,000, reaching a high of only $997. At $951, it sits just above its $950 low from November 11. The coin has been under selling pressure since early November after reaching a 30-day high of $1,322 on November 6, and it now trades 28.1% below that level.

Zcash currently trades 21.8% below its 20-day average of $1,216 and 25.5% below its 50-day average of $1,276. As a result, many recent buyers are now facing losses. However, it remains 21.1% above its 200-day average of $785.

Despite the recent downturn, Zcash is still up 86.1% year-to-date, following a one-year high of $1,653 on September 26. Much of the recent selling likely stems from profit-taking after such a significant gain.

Zcash Fell More Than Three Times as Far as Bitcoin This Week

The broader cryptocurrency market has also declined. In the last 24 hours, Zcash’s 4.7% drop aligns with Bitcoin (CRYPTO: BTC), which fell 3.9%, Ethereum (CRYPTO: ETH) by 4.1%, and Solana (CRYPTO:SOL) by 4.9%.

However, over the past week, Zcash’s 23.8% loss is starkly greater than Bitcoin’s 6.9%, Ethereum’s 12.5%, and Solana’s 11.3% drops. This suggests Zcash has faced more targeted selling, a risk we highlighted in our comparison between Zcash and Bitcoin.

One factor to consider is governance. A proposal on the Zcash forum, posted on November 9, suggests that the Zcash Community Grants fund, a source of funding for Zcash builders, should establish a treasury committee of at least three members. Only this committee would be allowed to buy, sell, convert, or hedge ZEC, with a ten-year budget due by March 31, 2027. This uncertainty surrounding the grants fund may lead potential buyers to hesitate.

On November 11, Grayscale stated that “Active Zcash developers have 2x’d in two years, outpacing the rest of crypto.” As the operator of ZCSH, Grayscale benefits from increased investment in ZEC, and while more developers can strengthen the network over time, it hasn’t translated into immediate buying activity this week.

Is the Grayscale Zcash ETF Why ZEC Can’t Stay Above $1,000?

The Grayscale Zcash ETF likely only accounts for part of Zcash’s recent decline. While $14.6 million in outflows increased market supply, Zcash fell 10.2% on November 10 with no outflows, suggesting other factors are at play. Profit-taking after an impressive 86.1% increase this year, coupled with uncertainty about the grants fund, appears to be weighing more heavily on ZEC’s price.

If ZCSH sees a few consecutive days of net inflows, selling from the fund may cease. A close above $1,000, 5.2% above the current price, could signal a return of buyer confidence, especially if ZEC recovers to its 20-day average around $1,216. Conversely, a close below the $950 low could bring attention to the 200-day average of $785, 17.5% lower, and could lead to more selling until buyers on exchanges absorb the excess supply.

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