On September 17, the privacy coin ZEC, which had been lingering on the fringe of mainstream narratives, suddenly became the focus of the market: its price surged approximately 13%–15% within 24 hours, with volatility reaching about 16.6%. It repeatedly hit the $1440–$1444 USD/USDT range, continuously reaching new highs in a short period, before oscillating near the high range of about $1420–$1434. As the price rapidly rose, the scale of leveraged funds being liquidated also quickly expanded: Coinglass data shows that over the past 24 hours, the total liquidation amount of ZEC contracts has exceeded $58 million, primarily driven by short positions, with the largest single liquidation amount approaching $6.99 million. The price upward movement and the short position concentration led to a classic short squeeze structure. During this period of market activity, DeFi researcher Ignas proposed the concept of a "dividend-type Meme" on the X platform and used ZCAT as an example, where holders can receive ZEC dividends, suggesting that cash flow returns similar to dividend stocks can be gained while waiting for price increases. This parallel occurrence of the dividend narrative surrounding ZEC and the unusual price movements became the first signal that funds might be rewriting the logic of privacy coins and meme gambles.
Short Liquidations of $58 Million: The Bloodbath Behind ZEC's Surge
From the contract data, this round of ZEC's surge was accompanied by a typical short liquidation bloodbath. Coinglass statistics show that as the price continuously approached the $1440–$1444 range on September 17, with a 24-hour increase of about 13%–15% and volatility of approximately 16.6%, the total liquidation amount in the ZEC contract market in the past 24 hours has exceeded $58 million, predominantly from short liquidations, with a significant imbalance between long and short positions, highlighting the characteristics of concentrated short liquidations. The peak of liquidations coincided with the rapid price increase that reached above $1440, when the upward price triggered the forced liquidation of short positions, which in turn pushed the price higher, thus closing the short squeeze loop.
In this chain reaction, the largest single contract liquidation amount was about $6,990,340, indicating that a single large leveraged short was completely wiped out in a short period. This data directly illustrates the high confidence of certain traders in their trend judgments and the extremity of leveraged usage. When the price breaks through key ranges and triggers significant short liquidations, this passive buying not only strengthens the upward momentum of both the spot and contract markets but also rapidly reverses the sentiment structure in the market: funds that had previously bet on further declines were forced to buy back at higher levels, while remaining shorts faced a dilemma of either providing additional margin or liquidating their positions. This round of $58 million scale, centered on short positions, is a clear example of leveraged sentiment being countered.
The Old Narrative of Privacy Coins Heats Up: Market Background of ZEC's Breakout
Before this round of market activity, Zcash, as one of the early adopters of zk-SNARKs zero-knowledge proof technology, had long remained on the periphery of mainstream narratives. Privacy assets operated under the shadow of regulatory scrutiny and the risk of delisting from exchanges, with funds favoring more transparent and easily compliant sectors, leading to ZEC's technical label not translating into sustained valuation premiums and remaining more of a passive entry in the "historic privacy projects" ledger rather than a priority in fund rotations.
On September 17, ZEC's price surged continuously, repeatedly hitting the $1440–$1444 range and achieving new highs, with a 24-hour increase of about 13%–15% and price volatility of about 16.6% (according to a single source). This set of data itself is significantly higher than the previously established presence of the privacy sector. The question is whether this breakout signifies a phase revaluation of the privacy sector or a local anomaly of a single asset under specific narratives and the influence of a short squeeze. From the perspective of sector rotation, the possibility that funds are re-focusing on privacy assets is indeed being opened up: technical accumulation and the narrative of being "undervalued" are more easily repackaged during price volatility, and short-term funds are willing to bet on recovery and rectifications of undervalued assets; however, the limitations are equally clear—regulatory expectations have not fundamentally changed, and privacy assets are still not on the strategic allocation list of mainstream funds. This indicates that the current surge of ZEC resembles a high-intensity structural event rather than the starting point of a comprehensive revaluation of the privacy sector.
Contract Short Imbalance: The Chain Reaction from Short Squeeze
If we view this surge as a structural event, the most intuitive structural imbalance appears on the contract side. In the past 24 hours, ZEC's price increased by approximately 13%–15%, with volatility nearing 16.6%, while Coinglass reports that the total liquidation amount of contracts exceeded $58 million, primarily from short liquidations. This combination of "price increase + volatility + direction of liquidations" indicates that prior market participants had distinctly bearish leveraged positions on ZEC: short positions were not only concentrated in the contract market but also in larger, highly leveraged accounts, with the maximum single liquidation of approximately $6.99 million serving as a magnifying glass for this concentrated risk.
In such a position structure, an upward price movement inherently triggers a mechanical short squeeze. Prices rise initially, causing some shorts to hit margin thresholds, leading to forced liquidations by exchanges, resulting in passive buy orders that must be executed in the market; these buy orders, combined with active spot purchases, push prices even higher, further driving more leveraged shorts to the edge of liquidation, creating a spiral of buy pressure. As ZEC oscillated around the $1420–$1434 high range, the behaviors of leveraged funds further compounded the volatility: on one hand, risk control drives remaining shorts to reduce positions while passively buying at high levels; on the other hand, some previously shorted funds choose to open long positions, chasing prices upwards and adding new leveraged long exposures. The combined effects of trend-following liquidations and reverse openings resulted in not only a temporary price spike but also sustained increased amplitude and trading activity within a high volatility range.
Ignas's Dividend-Type Meme: ZCAT Using ZEC for Dividends
On the same time axis when the price of ZEC was pushed up by leveraged funds, DeFi researcher Ignas proposed the concept of a "dividend-type Meme" on the X platform, attempting to transplant the logic of dividends into meme coins, reducing the opportunity cost of pure speculative holding. Traditional meme coins typically do not provide any cash flow returns during the holding period, allowing participants to only realize returns when prices rise, while being in a "funds idle" state during price consolidation or retreat phases. Ignas pointed out, using ZCAT as an example, that holders can receive ZEC as dividend returns during the wait for price increases, meaning that while bearing meme price volatility, they can also tap into cash flow from assets like ZEC, which narratively aligns more closely with preference for dividend income, suitable for retirement investment portfolios.
From the fund's perspective, the appeal of dividend-type memes lies in converting "waiting time" into a revenue-generating duration: some holdings are aimed at profiting from ZCAT's price elasticity while locking in on-chain cash flow through ZEC dividends, thereby weakening the traditional meme structure that "relies only on the next wave of buyers." However, the risk points are also evident: the dividends depend on the project team consistently distributing ZEC to holders, and if the rhythm, amount, or expectations of distributions change, the narrative support will be swiftly reevaluated; simultaneously, dividend returns are difficult to hedge against the high volatility of meme prices, and the overlapping price curves of ZCAT and ZEC may amplify both unrealized gains and losses, ultimately testing whether dividends can stabilize in the long term and whether the market remains willing to pay premiums for such hybrid narratives.
Fund Rotation or Narrative Resonance: Testing Privacy Coins and Memes
From the current data snapshot, ZEC's strong surge on September 17, repeatedly hitting the $1440–$1444 range and reaching new highs, while on the contract side seeing over $58 million in liquidations dominated by short positions within 24 hours, reflects a typical short squeeze characteristic formed by price increases and concentrated short positions under high leverage speculation directed at a single asset, rather than a confirmed comprehensive fund rotation within the privacy coin sector. Moreover, the data from this market activity comes from a single source assessed as medium quality, and the privacy sector had not previously been a market mainstream hotspot. The more reasonable judgment now is that funds are conducting a high-intensity probe on ZEC, and whether this expands into a sector-wide market movement remains to be observed. The narrative of dividend-type memes overlays this period, with Ignas proposing that ZCAT distributes ZEC to holders, allowing investors to obtain cash flow returns similar to "dividends" while waiting for price increases, indeed providing a new valuation and sentiment anchor for ZEC, a privacy coin that adopted zk-SNARKs technology early on. However, without substantial data on dividend ratios, lock-up rules, and audit conditions, this hybrid structure using privacy assets as a dividend base is still in its early verification stage, more like a resonance window for sentiment and narrative rather than a mature pricing model. Key indicators to be closely monitored include: whether ZEC transitions from a single short-term spike into a longer cycle with broader links to various privacy coin assets; changes in structure between shorts and longs in the contract market, and whether short squeezes continue to recur or are digested in one go; the actual distribution rhythm of dividend-type memes like ZCAT and the stability of on-chain cash flow; whether the concentration of holding addresses and chips worsens; and whether the market is still willing to pay valuation premiums for the combined narrative of "privacy coins + dividend memes" under regulatory uncertainty and incomplete information. These variables will collectively determine whether the current localized anomaly represents the starting point of fund rotation or a short-lived event that is difficult to replicate.
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