Zcash Short Squeeze: $39 Million in Losses as Price Surges Past $1,000

For the first time since 2016, Zcash (ZEC) has seen a spectacular price increase that has surpassed the $1,000 level and set off a major short squeeze. In the last month, the value of the cryptocurrency has increased about 120% to more than $1,124. Three big leveraged short positions with total unrealized losses of about $39 million left this meeting. Though remarkable, this price mark falls short of ZEC's all-time high of $3,191.93 soon after its 2016 introduction.

Zcash's rise has been driven by a number of elements. On August 25, the debut of the Grayscale Zcash Trust (ZCSH) on NYSE Arca—the first US-listed Bitcoin ETP (Exchange Traded Product) offering direct ZEC exposure—has raised regulated access. Furthermore, Zcash is promoted as "AI-proof private money" in a comeback in the "privacy coin" story that has grabbed market notice. Record futures leverage and forced short covering caused by liquidations have helped to drive up the price movement; total ZEC liquidations over 24 hours total some $36.6 million.

The present market dynamic is optimistic as underwater shorts may be compelled to purchase ZEC, therefore pushing the price up. However, this situation is delicate; the high open interest of $2.56 billion means a dramatic reversal may set off long liquidations, therefore turning the market negative fast. This increase draws attention to a split in the privacy coin market that Zcash leads in heading and has greatly surpassed Bitcoin and the larger cryptocurrency market.