Zcash Rally Faces Supply, Privacy and Security Risks

Zcash (ZEC) has staged a sharp rally, rising from about $251 in early June and $486 in mid-August to above $1,200 by September. The token gained more than 150% from its mid-August level, nearly 400% from early June, and briefly entered the crypto market’s top 10 by market capitalisation. Renewed interest in privacy coins, speculative buying and a potential short squeeze have driven the move. The rally has revived criticism of Zcash’s token economics. F2Pool co-founder Wang Chun highlighted the original founder reward, which directed 20% of block rewards to founders, employees, advisers and investors for four years. A similar 20% allocation later continued through a development fund. Critics also say Zcash privacy is optional because users and services can still use transparent addresses, unlike Bitcoin’s miner-focused issuance model. Governance and security concerns have added to the debate. Electric Coin Company’s core development team reportedly left in January 2026 after disputes with Bootstrap. In May, researcher Taylor Hornby identified a flaw in the Orchard privacy circuit that could theoretically have enabled counterfeit ZEC without an obvious on-chain trace. The flaw was patched through subsequent upgrades, but the market could not conclusively establish whether it had been exploited. Arthur Hayes later disclosed that he sold his ZEC holdings, after which ZEC fell from about $624 to roughly $309. More recently, a large ZEC short on Hyperliquid reportedly remained open despite substantial unrealised losses. Bulls point to the US Securities and Exchange Commission ending its investigation into the Zcash Foundation without enforcement action, possible institutional access through an ETF listing, and valuation scenarios based on ZEC capturing a larger share of Bitcoin’s market capitalisation. For traders, Zcash remains a high-volatility, event-sensitive asset. The rally may extend if privacy-coin momentum and short squeezes persist, but unresolved supply verification, governance and privacy-adoption concerns leave ZEC exposed to profit-taking, renewed short pressure and abrupt reversals.