Over 1% of ZEC Supply Unshielded in Early 2026, Sparking Sell-Off Concerns

Core Insights - In early 2026, over 200,000 Zcash (ZEC) were unshielded, representing approximately 1.2% of ZEC's circulating supply, as privacy coins continued to underperform the broader market [2][6] - The unshielding event has raised concerns about potential sell-offs, particularly as a whale transferred 74,002 ZEC, valued at about $35.75 million, to Binance shortly after the unshielding [5][6] - Despite a general recovery in the altcoin market, ZEC's price declined from $530 to $490, a drop of around 7%, indicating a divergence from the overall market trend [6][7] Group 1: Unshielding Activity - The unshielding process involves converting funds from shielded pools to transparent pools, often for trading purposes [2] - The total amount of ZEC in shielded pools decreased to approximately 4.86 million ZEC after previously peaking above 5 million [3] - Deposits into shielded pools have stagnated, suggesting a lack of bullish sentiment compared to previous growth [4] Group 2: Market Performance - ZEC has experienced significant derivative capital outflows, with increasing short positions noted [6] - The overall altcoin market capitalization (TOTAL3) increased by 7%, rising from $825 billion to $885 billion, while ZEC's price fell [6] - Other privacy coins, including Monero (XMR) and Dash (DASH), have also underperformed, indicating a trend of weakness in the privacy sector [7] Group 3: Institutional Interest - Grayscale has identified Zcash (ZEC) as a promising altcoin, anticipating continued growth in the privacy sector driven by rising institutional interest [8]