Privacy narrative loses steam as markets hammer ZCash

Privacy coins lost their appeal, with more than 95% of assets in the red, with ZEC leading the decline. The privacy narrative was not enough to redirect liquidity beyond the short-term pumps. 

ZCash (ZEC) led the decline among privacy coins, showing the short-term appeal of the entire narrative. ZEC led the losses, wiping out over 25% of its value in a single day, after spending weeks as the most active asset.

ZEC extended its recent streak of losses and long liquidations. 

The ZEC rally showed several signs of slowing down, but finally ended following the overall market correction.

Privacy tokens as a whole erased their value, for a total market cap of just over $15B. ZEC also became the second-largest asset, leaving the top spot to XMR. Currently, Monero traded closer to its usual range, erasing just 4% in the past day.

In total, 98 out of 104 privacy coins and tokens are in the red, based on Cryptorank data. The decline of the narrative showed that the enthusiasm was short-lived, mostly linked to the price pumps. Despite the real-world usage of privacy tools, the coins mostly failed to recover their all-time peaks. 

Can ZEC return with a relief rally? 

ZEC sank to $324.31, trading near an all-time high. At this point, ZEC is around 60% from its peak, entering the range for relief rally predictions. In its initial run, ZEC failed to conquer the $1,000 level, despite expectations that it could reach that price early next year. 

ZEC trading is highly concentrated, with 35% of all activity going through Binance. This means a ZEC pump is possible based on the concentrated USDT liquidity. 

In early November, ZEC demonstrated it could dip to the $440 range and recover to new peaks above $700. This time around, ZEC lost its previous support level, spending a longer time unraveling its previous price levels. ZEC has lost some of the confidence of traders, and retail remains underwater, which may lead to a capitulation. 

There are many skeptics of the narrative that ZCash can replace Bitcoin, inviting a rotation of liquidity. However, in the short term, ZEC may still recover to a higher price range. 

Shielded ZEC remains at a high level

One of the main narratives for ZCash is that shielded coins may provide a baseline of holders. A total of over 4.79M ZEC are shielded in three main pools, and those coins may not be sent to exchanges. 

Additionally, Cypherpunk Technologies has accumulated a small treasury of 233,644 ZEC. The total supply of ZEC is at around 16.41M, still leaving enough supply for trading. However, ZCash can hardly compete with BTC’s infrastructure in both mainstream and decentralized trading. 

Only 1,412 ZEC have been wrapped in the form of ZenZec tokens, to be used in Solana-based DeFi. ZEC also registers around 7K daily transactions, a significant drop in activity since the coin’s price peaked. Soon after the transaction record, ZEC activity returned closer to its baseline. 

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