Zcash Drops 11% After Meteoric Run Leaves Leverage Hanging by a Thread 📉

Privacy-focused cryptocurrency Zcash fell 11% over the past 24 hours to a market capitalization of $18.5 billion, according to Decrypt data, making it one of the largest decliners of the day. The drop followed months of gains that pulled in leveraged traders and left the token exposed when sentiment shifted.

Luke Nolan, senior researcher at CoinShares, said Zcash's "meteoric rise" means it remains up 460% from its March lows, and that in a "fragile" crypto market the largest gainers tend to give back the most. "There was a decent build-up of leverage on the way up as this is also a natural consequence of a strong move," Nolan told Decrypt. "More attention brings more perp traders to take on leverage, and when there is a sneeze, the moves get amplified as those leveraged traders are either forced to reduce exposure or get liquidated."

CoinGlass data shows $17.9 million worth of Zcash long positions were liquidated over the past 24 hours, compared with $7.3 million on Hyperliquid over the same period.

The sell-off also reflects fears that artificial intelligence could erode cryptographic guarantees faster than quantum computing. Last week, Ethereum co-founder Vitalik Buterin and Ethereum Foundation researcher Justin Drake warned the industry to prepare for "bunker mode," with Drake calling on participants to move funds to addresses whose public keys have not been exposed. Buterin said it is "plausible" for AI to break encryption within the next two years.

The discussion was triggered after OpenAI published major progress in math, raising concerns about the future of encryption. "The OpenAI math breakthroughs has caused a lot concern in crypto given the conspicuous lack of cryptography proofs," Ryan Zurrer, founder and director of investment firm Dialectic, told Decrypt. "More complex privacy protocols such as Zcash have the most to lose in a zero-day event if core primitives are rendered obsolete against AI-driven cryptography attacks."

Zcash has pushed ahead with efforts to harden its network. Zakura, a Zcash full node developer, said the team expects the protocol to be quantum-proofed as well as reasonably AI-proofed by January. Tim Sun, senior researcher at HashKey, told Decrypt that the project's quantum-resistant roadmap "served as a key catalyst" for the recent rally, adding that actual implementation remains some distance away.