Zcash (ZEC) has emerged as a top-performing cryptocurrency in the fourth quarter, surging 483% in October alone. This significant price rally has drawn considerable attention and liquidity into the coin, especially in derivatives markets.
Open interest in ZEC futures contracts has jumped from approximately $36 million at the start of October to about $663 million currently, indicating a $627 million increase in fresh capital flowing into ZEC perpetual contracts.
Zec Outperforms Bitcoin Amid Technical Divergence
Technical analysis reveals a notable divergence between ZEC and Bitcoin (BTC) price movements. In previous cycles, such as in 2021, ZEC and BTC moved closely together, with ZEC peaking around $300 levels when BTC reached highs near $63,000 to $64,000.
The ZEC/BTC ratio then reached highs of 0.007 before settling near 0.0003 during a prolonged accumulation phase. However, since the start of Q4 2023, this ratio has increased by more than 485%, reflecting ZEC’s substantial outperformance over Bitcoin.
During October, Bitcoin’s price declined roughly 4%, while ZEC’s price climbed sharply, signaling a rotation of capital from Bitcoin to Zcash.
Rising On-Chain Privacy Usage Supports Zcash Rally
The recent ZEC price rally coincides with strengthened fundamentals, particularly in privacy adoption. Approximately 4.5 million ZEC tokens—around 30% of total supply—are currently held in shielded pools, which facilitate private transactions on the network.
Daily shielding activity has increased to nearly 50,000 ZEC during the rally, marking significant on-chain usage and user engagement with Zcash’s privacy features.
For comparison, Monero (XMR), another leading privacy coin, has maintained less than 15% shielded usage over the past decade, whereas Zcash has already doubled that figure.
Implications for Market Dynamics and Privacy Token Demand
Zcash’s strong performance and growing privacy adoption suggest it may increasingly attract investor interest away from Bitcoin. The technical and on-chain indicators point to a potential shift in market dynamics within the cryptocurrency sector.
Whether this momentum will lead to a sustained breakout or a short-term correction remains to be seen, but Zcash’s current trajectory underscores its rising position among privacy-focused digital assets.
