More than 1% of Zcash’s supply — roughly 200.000 ZEC — was unshielded in early January 2026, a flow that preceded a sharp sell reaction and raised liquidity concerns among traders and treasuries. Market participants flagged a subsequent 74.002 ZEC transfer to Binance (about $35.75 million) as a likely precursor to liquidation.
Blockchain data showed a meaningful shift of previously shielded ZEC into transparent addresses and exchanges. Shielded pool growth decelerated, with the aggregate shielded balance easing from above 5.000.000 ZEC to about 4.860.000 ZEC. Shielded supply still represented near 23% of circulating ZEC, indicating continued — but cooled — demand for privacy features.
Exchange inflows amplified price pressure. The 74.002 ZEC move to Binance was interpreted by traders as a liquidation intent and arrived alongside rising short positions in derivatives markets. Technical indicators compounded the bearish signal: moving averages flashed a “Strong Sell” and open interest in short contracts increased, tightening the path for a quick pullback.
The on‑chain movement coincided with a 7% price drop from $530 to $490 in early January 2026, even as the broader altcoin benchmark showed a 7% rebound, underlining sector‑specific pressure on privacy coins.
Market context, sentiment and institutional signals
Despite the short‑term sell pressure, on‑chain behavior showed dual signals. Whales accumulated as price dipped below $400, reflecting conviction among larger holders. At the same time, the privacy coin cohort remained the weakest segment during the altcoin recovery, amplifying sensitivity to concentrated flows.
Analysts at Grayscale flagged Zcash as a growth candidate for the year ahead. “We expect the privacy sector to strengthen in 2026,” Grayscale analysts said, noting institutional interest as a potential offset to episodic sell events.
The mix of active accumulation, persistent shielded demand and visible exchange flows created a volatile backdrop: liquidity providers face elevated risk of abrupt order‑book moves, while treasuries holding ZEC must weigh custody and exit costs when deciding whether to unshield large positions.
Investors and risk managers will be watching exchange inflows, shielded pool re‑accumulation and derivatives open interest for confirmation that the market has absorbed the excess supply. Institutional demand through 2026, as highlighted by Grayscale, will be a key counterbalance; if it materializes, it could blunt future sell waves and restore a more stable price trajectory for privacy‑focused assets.
