Zcash ETF suffered a $93.6 million outflow, and ZEC price plummeted 23%

Zcash U.S. stock spot ETF recorded a weekly net redemption of US$93.56 million, and ZEC prices fell back to around US$1300.

As of October 2, Zcash (ZEC) experienced a strong rebound in September, its US-listed spot ETF (ZCSH) recorded a net outflow of US$93.56 million. At the same time, ZEC prices fell to near the $1300 mark.

Changes in Capital Flow and Asset Size

According to SoValue ETF data, Grayscale's ZCSH fund recorded a net redemption of US$93.56 million in the week ended October 2, the first time since late August that the fund has experienced negative growth in a single week. Data showed that the single-day redemption amount reached US$30.25 million on September 30, and another US$26.93 million was redeemed on October 2 alone.

Affected by this, the fund's total net assets fell to approximately US$751 million. Despite this week's large outflows, cumulative net inflows remained positive at approximately $212.56 million. Previously, as ZEC prices rose and investor demand increased, the fund attracted cumulative net inflows of approximately $271 million in mid-September, with approximately $98.2 million in the strongest week.

Price correction and market background

On October 3, ZEC closed at around US$1304, far below the recent high of more than US$1650 at the end of September. From its closing peak on September 26 to October 3, ZEC prices fell by about 21%. CoinGecko's historical data shows that ZEC closed at US$1,653.12 on September 26, then fell to US$1,483.24 on September 28, slipped further to US$1,438.21 on September 30, and closed at US$1,301.16 on October 2.

It is worth noting that this decline in asset value was not entirely caused by investor redemptions. Since ZCSH holds ZEC tokens, fluctuations in the market price of the token will lead to changes in the market value of the fund's assets even if there is no subscription or redemption by investors. Prior to this, selling pressure was already beginning to appear: the open interest in ZEC perpetual contracts on OKX dropped from US$236.8 million on September 18 to US$165 million on September 28, indicating that traders reduced their leveraged positions as prices fell. In addition, ZEC lost its key support level of US$1500 at the end of September, and the RSI indicator also fell back from the strong range to 53.41.

Grayscale completed share split and added investment

While funds flowed out, Grayscale completed the forward stock split of ZCSH shares on September 30. According to Grayscale's September 30 filing with the SEC, the number of outstanding shares in ZCSH before the split was 7,989,300 shares, with net assets per share of US$111.41; after the split, the number of outstanding shares increased to 23,967,900 shares, with net assets per share adjusted accordingly to US$37.14. The split did not change the overall value of investors 'positions. Each old share became three new shares, representing one-third of the original net assets per share. ZCSH continues to trade on NYSE Arca under the same symbol.

Previously reported that Digital Currency Group (DCG) injected approximately US$100 million into ZCSH through Authorized Participants (AP) on September 8 in exchange for 85,705.32563297 ZEC tokens. Grayscale said that the shares acquired by DCG are the same as other ZCSH shares in terms of economic attributes and do not have special priority.

Zcash network upgrade is about to advance

While the market is paying attention to the dynamics of ETFs, Zcash Network has also ushered in an important technological upgrade node. The Zcash Foundation announced the release of Zebra 7.0.0-rc.0 on October 2 as the first candidate for the NU7 upgrade. Test network activation is expected to occur at a block height of 4,465,026, approximately October 6.

The NU7 upgrade aims to reduce Zcash's target block time from 75 seconds to 25 seconds. The new version introduces a "network sustainability mechanism" that reallocates some transaction fees to future block rewards and adds restrictions to protect private transactions from spam. The developer plans to finally determine the height of the main network activation based on the operation status of the test network on October 20. The current goal of the roadmap is to achieve main network activation on November 5. Currently, main network operators do not need to update immediately, but test network operators have been required to install a new version of Zebra before activation on October 6 to keep the network synchronized.