Zcash’s U.S.-listed spot ETF has recorded $93.56 million in net outflows for the week ended Oct. 2 as ZEC fell toward $1,300 following its strong September rally.
Summary
- ZCSH recorded $93.56 million in weekly net outflows, its first negative week since late August.
- Daily redemptions reached $30.25 million September 30 and another $26.93 million on October 2 alone.
- ZEC closed near $1,304 on October 3, well below its recent late-September peak above $1,650.
- Grayscale completed a three-for-one ZCSH share split on September 30 without changing investor value overall.
- DCG invested roughly $100 million into ZCSH on September 8 through an authorized participant transaction.
According to SoSoValue ETF data, the weekly loss was the first net outflow for Grayscale’s ZCSH since the end of August. Total net assets fell to approximately $751 million, while cumulative net inflows remained positive at around $212.56 million.
The reversal came after strong demand during the fund’s first weeks of exchange trading. Grayscale converted its long-running Zcash Trust into ZCSH on Aug. 25, giving investors access to ZEC through NYSE Arca without directly holding the cryptocurrency.
Zcash ETF investors pulled $93.56 million in one week
ETF withdrawals accelerated near the end of September. SoSoValue data showed $30.25 million leaving ZCSH on Sept. 30, followed by another $26.93 million on Oct. 2. Combined with withdrawals on other sessions, weekly net outflows reached $93.56 million.
The move reversed part of the money that entered ZCSH during September. The fund had attracted around $271 million in cumulative net inflows by mid-month, including approximately $98.2 million during its strongest week.
ZCSH had grown quickly after its August listing. As crypto.news previously reported, the fund launched with approximately $304 million in assets before rising past $400 million as ZEC climbed above $1,000.
By late September, the fund had crossed $1 billion in assets as both ZEC prices and investor demand increased. ZEC was trading near $1,535 on Sept. 26 after gaining roughly 102% over the preceding month.
The latest asset decline should not be treated as entirely caused by withdrawals. Because ZCSH holds ZEC, changes in the token’s market price can raise or reduce the dollar value of the fund’s assets even without investor creations or redemptions.
Zcash price has fallen back toward $1,300
ZEC’s pullback has taken the token well below the highs reached during September.
CoinGecko historical data showed ZEC closing at $1,653.12 on Sept. 26 before dropping to $1,483.24 on Sept. 28. The price fell further to $1,438.21 on Sept. 30 and $1,301.16 on Oct. 2. ZEC closed Oct. 3 at $1,304.32.
The move from the Sept. 26 close to Oct. 3 represented a decline of roughly 21%. ZEC had briefly traded above $1,600 during the previous rally, after beginning September below four figures.
Selling pressure had already appeared before the ETF posted its first negative week. As crypto.news reported on Sept. 29, ZEC perpetual open interest on OKX declined from $236.8 million on Sept. 18 to $165 million on Sept. 28. The drop showed traders were reducing leveraged positions as the price retreated.
By Sept. 30, ZEC had lost the $1,500 area. Another crypto.news market report noted that the token was trading close to $1,400 at the time, with its RSI falling to 53.41 after previously stronger momentum.
ETF redemptions occurred during the same period, but available data does not establish that the withdrawals caused the entire ZEC decline. Falling leverage, profit-taking after September’s rally and changing spot demand were occurring alongside the ETF flows.
Grayscale split ZCSH shares as outflows increased
Grayscale completed a three-for-one forward share split for ZCSH on Sept. 30, the same day the fund recorded its reported $30.25 million daily net outflow.
According to Grayscale’s Sept. 30 SEC filing, ZCSH had 7,989,300 shares outstanding before the split, with a net asset value of $111.41 per share. The share count increased to 23,967,900 after the adjustment, while NAV per share fell to $37.14.
The split did not change the overall value of an investor’s holdings. Each pre-split share became three shares representing approximately one-third of the previous NAV per share. ZCSH continued trading on NYSE Arca under the same ticker.
As crypto.news reported before the split, investors listed as shareholders at the Sept. 28 record date received two additional shares for every ZCSH share they already owned.
A separate Grayscale filing shows that Digital Currency Group had invested roughly $100 million into ZCSH earlier in September. On Sept. 8, DCG acquired fund shares through an authorized participant or its designee in exchange for 85,705.32563297 ZEC.
Grayscale said the shares received by DCG were economically the same as other ZCSH shares and carried no special preference features.
Zcash network upgrade is next on the calendar
Zcash now has a network event approaching as ETF investors monitor the token following its September rally.
The Zcash Foundation announced Zebra 7.0.0-rc.0 on Oct. 2 as the first release candidate for the NU7 upgrade. Testnet activation is expected around Oct. 6 at block height 4,465,026.
NU7 is designed to reduce Zcash’s target block time from 75 seconds to 25 seconds. The release introduces a Network Sustainability Mechanism that redirects part of transaction fees toward future block rewards and adds limits intended to protect shielded transactions from spam.
Zcash developers have scheduled a final decision on the mainnet activation height for Oct. 20 after reviewing the testnet rollout. The current roadmap targets Nov. 5 for mainnet activation.
Mainnet operators do not need to update yet because the final activation height has not been set. Testnet operators have been asked to install the new Zebra release before the Oct. 6 activation to remain on the NU7 test network.
