Zcash has recently rebounded to around $430, a more than 60% recovery from its previous crisis lows. Foreign media reports indicate this recovery occurred primarily after the market quickly priced in risk premiums. Previously, the disclosure of the Orchard vulnerability triggered a sell-off, with traders concerned about the potential for undetectable counterfeit supply on the network.
With the emergency upgrade completed and the network restored, market sentiment gradually stabilized. The report noted that no evidence of exploitation of the vulnerability was subsequently found, significantly alleviating concerns about the protocol's integrity. During the same period, Zcash's market capitalization rebounded to approximately $7.2 billion, and on-chain activity remained generally stable, indicating that there was no large-scale panic selling among token holders.
The rebound was largely driven by short covering.
Foreign media believe that this round of gains is more like a price correction after position rebalancing, rather than a new round of strong bullish sentiment. After the patch was confirmed to be implemented, selling pressure began to weaken, and the market shifted from panic pricing to revaluation.
During this process, some short sellers began to close their positions en masse, thus passively amplifying buying pressure. The report cites the example of crypto trader Garrett Jin closing his position when ZEC rose to $430.81. His entry price was approximately $626.47, and he held the position for over 16 days, corresponding to a nominal position of approximately $35.9 million, resulting in a profit of over $11.2 million.
Open interest lacks expansion
However, the report suggests that ZEC is currently entering a post-liquidation cooling-off phase, with the earlier derivatives-driven rebound momentum weakening. Open interest is currently stable at around $1.06 billion, but has not seen any significant new expansion after the previous volatility.
Meanwhile, funding rates remain in negative territory. This typically indicates that the market is closer to short covering than sustained new long demand. The difference between cumulative spot trading volume and exchange fund flows also shows divergence, suggesting that continued accumulation in the spot market remains weak.
We will continue to monitor the return of funds to the spot market.
Foreign media outlets believe that if volatility continues to converge, but open interest and spot inflows do not recover in tandem, the upside potential for ZEC may be limited. The previous rapid recovery driven by risk release has largely been completed; whether it can continue to rise depends on whether more stable new funds emerge in the spot and derivatives markets.
