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Single-day surge of 43%, crypto giant signals entry—Should ZEC's breakout be chased?

ZEC surged 43 yesterday, breaking through $600, hitting a new high for the year, becoming the most explosive coin in the crypto market that day. Technical analyst Captain Faibik set a target price of $1,280.

Although it sounds very tempting, don’t rush to add to your position just yet!

Multicoin calls the shot, Robinhood supports

Multicoin Capital co-founder Tushar Jain announced today that he has been accumulating large ZEC positions since February. His investment logic is clear: Zcash represents the original cyberpunk ideals of cryptocurrency, an asset truly resistant to censorship and confiscation. He cited California’s proposed wealth confiscation policy as an example, believing political trends are accelerating demand for privacy assets.

Additionally, Robinhood’s US platform launched ZEC on April 23, covering over 10 million retail users in the US, including New York. On launch day, ZEC jumped 7% to $343. Moreover, the SEC closed a long-term investigation into the Zcash Foundation in January 2026, without taking any enforcement action, effectively granting ZEC a compliance pass.

Raoul Pal calls ZEC Bitcoin’s little brother, and Arthur Hayes has reportedly held positions in ZEC, adding to the narrative.

But none of these are the direct reasons for today’s surge.

Tushar Jain has been building positions since February, Robinhood’s launch was two weeks ago, and the SEC’s case closure was months ago. Relying on these as catalysts today doesn’t logically hold up.

What truly deserves attention is a set of data most people have overlooked.

The real driving forces: shrinking supply + short squeeze + shielded pool locking

First, the halving effect is materializing.

Zcash will complete its second halving on November 23, 2024, reducing block rewards from 3.125 ZEC to 1.5625 ZEC, with daily issuance dropping from about 3,600 to roughly 1,800 coins.

This means daily new supply is halved, and the annual inflation rate drops from about 12% to around 4%. Half a year after the halving, the effects of supply tightening are becoming evident. This pattern has repeatedly appeared in Bitcoin’s history, with the most significant price responses typically occurring 6 to 12 months post-halving.

Second, short positions are being wiped out.

On May 3, ZEC short liquidations reached $10.5 million. Today’s rally saw short liquidations soar to $59.24 million, accounting for 95% of total liquidations. This indicates many short sellers were forced to close their positions, buying back ZEC and pushing prices higher. It’s a classic short squeeze, not an orderly rise driven by fundamentals.

Third, the shielded pool is absorbing liquidity.

Currently, over 30% of circulating ZEC (about 5.18 million coins) is locked in shielded pools, with more than 90% of ZEC transactions conducted via Sapling shielded pools. Coins in shielded pools cannot be directly accessed by exchanges, effectively “freezing” them from circulation. With supply already tightening due to the halving, plus continuous absorption by shielded pools, the actual tradable ZEC is much less than it appears.

The undervaluation and rebound narrative also holds water

After Bitcoin broke $80k, funds started seeking undervalued sectors. ZEC’s rise from its February lows to $580 is indeed impressive. Its market cap is about $9.5 billion, ranking 14th. For an asset with compliance advantages, institutional backing, and shrinking supply, this valuation isn’t unreasonable.

Risks still exist

ZEC’s daily trading volume is $1.6 billion, with a market cap of $9.5 billion, and a turnover rate of about 30%. This is very high, indicating rapid chip turnover, with new buyers replacing profit-takers. If trading volume diminishes, prices could quickly retrace.

Another issue: although ZEC’s privacy narrative sounds appealing, its competitor Monero was collectively delisted from mainstream exchanges due to its stronger privacy features. ZEC remains listed on Coinbase and K-exchanges precisely because its privacy is “optional,” default transparent, with shielding as needed.

This design grants ZEC a compliance pass but also means its privacy protection isn’t as strong as Monero’s. If you truly need privacy, which would you choose? That’s a question that needs a long-term answer.