Written by: Xiao Bing

ZEC has risen 18% in the past 24 hours, priced at about 1479 USD. A month ago, it was around 485 USD, and a year ago it was 51 USD.

From $51 to $1479, it has increased 25 times in a year. Its market cap has surged to 25 billion USD, ranking 9th in the entire market. This increase comes from a privacy coin that has a ten-year history, a capped supply of 21 million coins, and which once fell from $5941 to $16.

In this round of market, at least three forces are simultaneously at work; understanding their respective weights is essential to determine if the current price is discovery or a bubble.

First Force: Grayscale Spot ETF

On August 25, Grayscale’s spot Zcash ETF (ticker ZCSH) was listed in the United States. This is the first regulated spot investment product for ZEC, which surpassed 400 million USD in AUM within two weeks.

The significance of ZCSH does not lie in the amount of incremental funds it brings (400 million USD is not a large proportion for an asset with a market cap of 25 billion USD), but in the change it brings to ZEC's investor structure. Before the ETF was listed, the only buyers of ZEC were native crypto investors and miners. After the ETF was listed, traditional investors can also allocate ZEC in brokerage accounts without needing to manage private keys or interact with crypto exchanges.

The impact of this structural change is long-term. When an asset changes from "only one type of investor can buy" to "multiple types of investors can buy," the demand curve is permanently raised.

Second Force: NU7 Voting Results

On September 14, the results of the community vote on the NU7 upgrade (ZCAP + token holder voting) were announced. About 2.4 million ZEC participated in the vote. Several key results:

Retention of the halving mechanism. 96.5% of voters opposed the "smooth issuance curve," choosing to retain the Bitcoin-style halving. This means that ZEC will continue to halve its output every four years, with the supply shock hard-coded. This is an important signal for price narratives, as the community clearly chose "scarcity" over "predictability."

NSM recovery postponed to February 2031. 96.6% of voters supported postponing the ZEC collected through the network sustainability mechanism (NSM) to 2031 before being reissued. This means that for more than four years in the future, the deflationary effect from transaction fee burn will not be offset by new supply.

Fee burn written into the protocol. 78% support burning a portion of transaction fees through NSM. This introduces a deflationary mechanism to ZEC similar to Ethereum's EIP-1559.

Rapid block generation (Project Tachyon) received near-unanimous support. Faster block generation means quicker transaction confirmations and improved user experience.

99.3% chose "release as soon as possible, cut unfinished features." The community wants speed, not perfection.

This set of voting results further pushed ZEC's economic model towards a "Bitcoin-like" direction: capped supply + halving + fee burn + delayed issuance. ZEC is positioning itself as a "Bitcoin with privacy features," rather than a "privacy tool with blockchain features."

This narrative shift is the most easily underestimated catalyst in this market round.

Third Force: $3.5 Billion Leverage Pool

Now let's look at derivatives data.

As of September 17, CoinGlass data shows:

ZEC futures open interest (OI) is $3.55 billion, reaching an all-time high, with 24-hour futures trading volume of $14.45 billion. The 24-hour spot trading volume is $1.61 billion. The 24-hour liquidation amount is approximately $67.36 million.

Breaking down a few numbers.

Futures to spot ratio is about 9:1. The derivatives trading volume is 9 times that of the spot. This means that the current price discovery is mainly driven by leveraged traders rather than spot buyers. A high futures to spot ratio is a signal of short-term price vulnerability; once the funding rate turns positive or longs take profits, the reverse effect of leverage will be magnified.

OI accounts for about 14% of market cap. The $3.55 billion OI compared to a $25 billion market cap gives a ratio of 14.2%. This number is on the higher side among mainstream coins. For comparison, BTC’s OI/market cap ratio typically sits between 2% and 4%, while ETH is around 3% to 5%. ZEC's 14% indicates extraordinarily high leverage participation.

Liquidation structure is bearish. In past price fluctuations, the main direction of liquidations has been bearish. On September 6, when it broke $1000, single-day bearish liquidations reached $46 million. The spike of 5.6% on September 11 was accompanied by $28.9 million in liquidations, also predominantly from shorts. This means that the "last mile" of the market rally was largely pushed up by bearish positions being liquidated, with new buyers making a limited contribution.

F2Pool co-founder Chun Wang candidly stated: "ZEC's rise is driven by narrative, the fundamentals do not match its current market ranking." He pointed out that ZEC has long-standing controversies regarding token distribution, governance, and security (the Orchard privacy protocol bug in June is one example).

Weight Assessment of the Three Forces

The three forces are not equal in weight.

ETF is a structural uplift at the bottom. It changes the accessibility of investors and establishes a lower bound for long-term demand. However, the ETF itself does not drive significant short-term price volatility; $400 million AUM spread across daily buying volumes has limited marginal impact.

NU7 voting is a mid-term narrative enhancer. Retention of halving + fee burn + delayed issuance, these three decisions lock in ZEC's "Bitcoin-like scarcity" narrative for at least four years. This narrative can support a multiple expansion of valuations, but it is a slow variable and does not explain the 176% increase over the past month.

Leveraged short squeeze is the dominant force for short-term prices. $3.55 billion OI, 9:1 futures to spot ratio, and price pushes dominated by short liquidations clearly point to a leverage-driven market. When shorts are nearly liquidated (or longs start taking profits), the direction of this force can reverse within hours.

To use an analogy: The ETF is the reservoir’s capacity, the NU7 vote is the direction of the flow, while the leverage squeeze is the tidal force driving the water level to fluctuate sharply in the short term. The reservoir is rising, the direction is correct, but only during the ebb tide will we know how much of today's water level was pushed up by the tidal force.

Current Risks

The daily RSI for ZEC is near 70, in the overbought zone. The 200-day moving average is at 586 USD, with the current price deviation exceeding 150%. The nine-year high position means there are no prior holding positions above providing resistance references, but there are also no historically verified support levels.

More specific risks: If Grayscale's ETF experiences net outflows (profit-taking) in the coming weeks, and leveraged longs begin to close positions, OI could quickly shrink from $3.55 billion, and the price might experience a retraction as severe as the rise.

In the short term, look at leverage; in the medium term, look at narratives; in the long term, look at ETF inflows and on-chain privacy usage.

Disclaimer: This article does not constitute investment advice. ZEC is extremely volatile, and leverage participation is at historic highs. Investors should assess risks independently.