Over 1% ZEC Unshielded, Are Investors Exiting Privacy Coins?

In the early days of 2026, holders unshielded a large amount of Zcash (ZEC) and brought it into circulation. This activity took place as privacy coins continued to underperform the broader market.

How could ZEC’s price be affected? The following analysis explores the details.

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More Than 200,000 ZEC Unshielded in Early 2026

Unshielding refers to the process of converting funds from shielded pools, which protect privacy, to transparent pools. This step is often taken to enable exchange trading or selling.

On-chain data indicate that during the first week of January, a holder withdrew more than 200,000 ZEC from shielded pools. This amount equals roughly 1.2% of ZEC’s circulating supply.

This move slowed the growth of ZEC held in shielded pools. The total fell back to around 4.86 million ZEC after peaking above 5 million at the end of last year.

Arkham data indicates that the holder deposited ZEC into shielded pools just over two weeks earlier, before proceeding to unshield the funds.

The chart indicates that deposits into shielded pools are no longer accelerating, as they did in Q3 2025. Activity has moved sideways. While this does not confirm a reversal, it suggests that bullish sentiment is no longer strengthening as it had been.

Meanwhile, on-chain monitoring account LookOnChain reported that a whale sent 74,002 ZEC, worth about $35.75 million, to Binance. This transfer occurred just one day after the large unshielding event. Many investors view this as a potential sign of preparation for selling.

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Additionally, ZEC ranks among the altcoins with the largest derivative capital outflows over the past week, according to CoinAnk. The platform also reports that short positions on ZEC continue to increase.

In fact, while the altcoin market in early 2026 shows signs of recovery, with TOTAL3 rising from $825 billion to $885 billion, a 7% increase, ZEC’s price fell from $530 to $490, a decline of approximately 7%.

ZEC’s divergence from the overall altcoin market capitalization raises questions about whether investors are abandoning expectations for ZEC in favor of other altcoins.

Not only ZEC, but also other privacy coins, such as Monero (XMR) and Dash (DASH), have underperformed the broader market in the early days of the year. This trend makes privacy the weakest-performing sector, according to Artemis.

However, Grayscale recently highlighted Zcash (ZEC) as a promising altcoin. The firm also expects the privacy sector to continue growing strongly in 2026, supported by rising institutional interest.