Privacy-focused cryptocurrency Zcash (ZEC) is experiencing significant market turbulence as data from CoinGlass reveals a staggering 1,374% increase in liquidation imbalance over the past 12 hours. This dramatic development has severely impacted bullish traders who were anticipating a continued price rally for the asset.
The liquidation surge was triggered by ZEC's sharp price pullback, which saw $1.44 million in long positions liquidated as the price failed to maintain upward momentum. Zcash dropped from an intraday peak of $455.22 to a low of $414.06, representing a decline that pushed the cryptocurrency below a key support level. As of the latest data, ZEC is trading at $418.86, reflecting a 6.62% decrease over 24 hours.
Interestingly, bearish traders also suffered losses during this volatility, with short position traders losing $97,690 when ZEC dipped below the $415 support level. Trading volume has also declined slightly by 0.17% to $589.72 million within the same period.
This volatility comes despite Zcash's recent strong performance. The privacy coin emerged as a standout performer in mid-December 2025, soaring 28% in one week while other privacy coins struggled. This performance occurred during a period of general market stagnation, fueling investor confidence that had some bulls predicting ZEC could reach $500 before year-end.
Long-term sentiment remains bullish despite current volatility, largely due to growing institutional interest. Grayscale has filed an S-3 registration for a Zcash ETF with U.S. regulators, suggesting increasing institutional recognition. If approved, this would mark the first Zcash ETF in the United States. With ZEC's market capitalization currently exceeding $6.8 billion, increased institutional adoption could potentially push it toward the $10 billion mark in coming years.
The regulatory landscape appears to be shifting in favor of privacy-focused assets like Zcash. SEC Commissioner Hester Peirce has publicly challenged the notion that transparency should always take precedence over privacy, while former SEC Chair Paul Atkins has warned against excessive financial surveillance, describing it as a "financial panopticon." This represents a significant departure from the enforcement-heavy approach seen between 2022-2024, when privacy tools like Tornado Cash faced severe regulatory pressure.
Zcash's unique privacy architecture, which allows for selective disclosure through viewing keys, positions it favorably in this new regulatory environment. This "compliant privacy" approach enables users to prove compliance when necessary without sacrificing fundamental privacy protections, making it particularly appealing to institutional investors.
