The Grayscale Zcash ETF recorded $93.56 million in net outflows over the past week, marking its largest weekly withdrawal since launching on NYSE Arca. The fund also saw $30.25 million leave on September 30 and another $26.93 million on October 2, extending a period of weaker ETF demand for ZEC.
The ZCSH Fund commenced trading on August 25 after the conversion of the Grayscale Zcash Trust by Grayscale into an exchange-traded product. The structure gives investors exposure to ZEC in the form of shares that are issued as interests in a trust that holds the cryptocurrency, instead of via futures.
The Grayscale Zcash ETF gained popularity right after its inception. Inflows of $271 million had been registered as of mid-September, while the asset value of the fund witnessed a considerable increase within its first few weeks of trading.
Also Read | HYPE ETF Institutional Buying: $4.96M Buy and 49M Burned
Grayscale Zcash ETF Faces Larger Outflows
The latest weekly figure shows a sharp change from that initial flow trend. There was a $30.25 million redemption of ZCSH on September 30, followed by a further $26.93 million withdrawal on October 2. Other days spanning late September and early October also saw significant redemptions, based on flow figures.
The recent weekly withdrawals have brought down the cushion of net inflows built up by the fund. Based on figures provided, the total net inflows currently stand at around $212.56 million after this recent decline, compared to approximately $268 million in the previous period. Even with the change in trend, however, ZCSH is still net positive since its launch in August.
This change is all the more pronounced since the ZCSH fund had managed to reach considerable scale within a short span of time. As per Grayscale, by September 8, the fund had already crossed the $500 million mark for assets under management, along with significant inflows in its first two weeks of existence.
ZEC Price Faces Pressure After Rally
ETF outflows have become evident now that ZEC is trading lower than the levels it reached during its previous upward move. Crypto With Gopal mentioned that ZEC is at the $1,316 level, forming a falling-wedge formation on the four-hour chart. Price action is moving within descending resistance and support following the previous pullback in the crypto’s price.
Based on the technical analysis, the wedge has tightened up after ZEC has fallen into consolidation. Gopal noted the upside level at $1,700 and added that breaking above the upper resistance could be good for the momentum formation. The formation brings further analysis to the recent drop in ETF flows.
In addition, it is important to consider the relationship between ETF flows and its asset. As ZCSH ETF allows its holders to get exposure to ZEC owned by the trust, the flow in the fund affects the quantity of crypto in relation to the ETF. However, ETF outflows do not confirm the reason investors sold their assets.
Zcash Network Activity Remains Mixed
On-chain information provides another insight into the activity related to Zcash. According to data from October 2, there were 7,113 finalized transactions, with 4,445 of those being transparent only, 795 shielded only, and 1,873 mixed transactions. All shielded transactions constituted 2,668 transactions, or 37.5% of the total number.
Pool-level data showed 2,458 transactions touching the Ironwood pool on October 2, while Sapling recorded 192 and Orchard recorded 92. These numbers indicate transaction volume rather than ZEC holdings within each respective pool. Thus, they give a picture of the level of network usage but do not imply investment demand directly.
The network figures also show that Zcash activity extends beyond the ETF market. Transactions can use transparent or shielded structures, meaning blockchain activity and exchange-traded fund flows represent different aspects of the ecosystem. Thus, network activity and flow of ETFs become two different aspects of the Zcash ecosystem.
What Happens Next for ZCSH?
Grayscale has also carried out a 3-for-1 forward stock split of ZCSH as at September 30. This resulted in the doubling of the shares but with a lowering of the price per share to preserve the same investment value. The split-adjusted trade commenced on NYSE Arca following the SEC filing.
The Grayscale Zcash ETF heads into October with net flows remaining positive but significantly below its mid-September peak level. On the other hand, ZEC continues to consolidate itself in the $1,300 range following its consolidation. Flow information in the coming days together with price action around the falling wedge pattern is going to be very important in the market.
For investors monitoring ZCSH, the main development is the contrast between its strong launch period and the recent withdrawals. While the $93.56 million net outflow does not alone point to a permanent shift in investor interest, it creates a short-term shift that needs to be watched along with ZEC price.
Also Read | SEC Crypto Custody Proposal Targets Clearer Rules for Digital Assets
This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
Be the first to comment