Zcash Crashes 21% - $6 Million in Long Bets Wiped Out in Market Shakeout

Zcash just got shredded. The privacy-focused cryptocurrency nosedived a brutal 21% in a single session, vaporizing over $6 million worth of leveraged long positions in the process.

The Liquidation Cascade

When Zcash broke below key support levels, it triggered a domino effect. Automated systems on major exchanges began forcibly closing over-leveraged bullish bets, adding pure selling pressure to an already steep decline. This is the market's ruthless mechanism for resetting excessive optimism—and it doesn't care about your conviction.

A Volatility Warning Shot

The wipeout serves as a stark reminder: crypto markets remain a high-stakes arena where volatility can flip from opportunity to obliteration in minutes. For every trader celebrating a short squeeze, there's a counterparty watching their position get liquidated—a classic tale of one person's 'market correction' being another's financial funeral.

While long-term believers might see this as a painful discount, the immediate aftermath is a landscape littered with stop-loss orders and recalculated risk models. It's the kind of shakeout that separates the hedged from the wrecked, proving once again that in crypto, the most reliable indicator is sometimes just the margin call.

The decline followed last month’s brief jump above $700, a rally that now seems unsustainable as trading volumes cooled after hitting $4.38 billion in mid-November.

The latest downturn has raised questions about what drove ZEC’s earlier rally, with analysts suggesting whale activity and short squeezes rather than lasting demand. Bearish sentiment strengthened on Hyperliquid, where 13 of the 20 largest traders moved into short positions, even accepting negative fees.

At the same time, some long-holding whales are sitting on steep losses, and Polymarket odds of ZEC hitting $1,000 this year have dropped from 42% to just 8%. Open interest across derivatives also fell below $500 million as short positioning increased.

Governance concerns

Alongside the market volatility, the Zcash community is debating the project’s governance model, specifically regarding the selection process for the Zcash Community Grants (ZCG) committee.

I hope Zcash resists the dark hand of token voting.

Token voting is bad in all kinds of ways (see https://t.co/Cvl7CFVgtc ); I think it's worse than Zcash's status quo.

Privacy is exactly the sort of thing that will erode over time if left to the median token holder. https://t.co/NbRqGLOrpj

Ethereum Co-Founder Vitalik Buterin urged Zcash to avoid token-based voting, arguing that giving influence purely to token holders concentrates power and encourages short-term thinking. He warned that such a system is “worse than Zcash’s status quo” and could weaken the project’s long-term commitment to privacy.

His comments come as Zcash reassesses leadership and oversight. A few days prior, Zooko emphasized that Zcash’s committee model has grown through years of debate among independent members who share the same mission, even when they disagree.

“Zcash has evolved a resilient governance system over many years, made up of thoughtful and independent people,” he said, highlighting the importance of collective input and careful deliberation.

He confirmed plans to run again in the next election cycle and noted that the recent rise in ZEC’s price has brought both new opportunities and more low-quality grant proposals, making careful review more important than ever. He also warned that higher funding levels could make spending decisions too easy if discipline slips.

Community reactions

The discussion attracted feedback from the wider crypto community. AngelList’s Naval Ravikant argued that decentralized protocols should move to fully on-chain governance. This way, decisions are transparent and not reliant on trusted intermediaries.

However, Darklight countered that while blockchains must stay trustless, research and development still need human judgment. He noted that on-chain voting often results in capital concentration or voter apathy. In contrast, committees like ZCG serve as a quality filter, helping to protect Zcash’s long-term vision and main principles.

Also Read: Grayscale Moves to Convert Zcash Trust into Spot ETF