Grayscale's New Zcash ETF Has Gathered $1 Billion in Assets in Just 30 Days. Here's Why Investors Are So Bullish on Zcash.

Most of the major cryptocurrencies have lost value in 2026. Zcash (ZEC -6.71%), the largest privacy coin by market cap, is a notable exception. It's up 149% on the year as of Oct. 22.

In the midst of that bull run, asset manager Grayscale launched the Zcash ETF (ZCSH +0.52%) on Aug. 25. The ETF was an immediate success, gathering more than $1 billion in its first 30 trading days. Grayscale managing director Krista Lynch noted that this puts it among the top 1% of ETFs launched over the past decade, ranked by assets gathered in the first month.

Why investors are bullish on Zcash

The main bull case for Zcash is increasing demand for financial privacy. Most types of cryptocurrency have public blockchains that provide a complete record of transactions. Zcash, on the other hand, gives users the choice between transparent and shielded addresses for each transaction. Shielded addresses encrypt the sender, receiver, amount sent, and memo field.

It anonymizes transaction data using a cryptographic method called zk-SNARKs, short for zero-knowledge succinct non-interactive arguments of knowledge. The method allows the Zcash network to mathematically verify that a transaction is valid without seeing the sender, receiver, or amount. The flexibility of Zcash sets it apart from the next-largest privacy coin, Monero, which doesn't offer transparent transactions.

About 29% of Zcash is now held in shielded addresses, up from about 12% at the start of 2025, a sign of the growing demand for privacy protection among holders.

Zcash also has the same built-in scarcity as Bitcoin, with a hard cap of 21 million ZEC, and new issuance halves roughly every four years. This scarcity will eventually eliminate inflation and could also drive up prices, assuming Zcash remains in demand.

The risks involved

The problem with privacy coins is that the feature that makes them valuable also attracts reputational issues and regulatory scrutiny. Privacy protection makes these cryptocurrencies a favorite of hackers. On-chain analysts, including ZachXBT and Specter, have reported that crypto attackers used Zcash to launder stolen funds in September and October.

Crypto exchanges have previously delisted or refused to list privacy coins, limiting trading options. Zcash is currently available on many major exchanges, including Coinbase. But that could change in the future, especially if regulators crack down on privacy coins.

Zcash's reputation also took a hit in June. Developers disclosed that its Orchard shielded pool had a critical vulnerability that could have allowed the creation of unlimited counterfeit Zcash. The vulnerability had been around since May 2022. Zcash developers patched the issue, and the Orchard pool was retired with Zcash's Ironwood network upgrade.

Should you invest in Zcash?

You're probably better off avoiding the Zcash ETF simply because it's so expensive. The fund charges a 2.5% management fee, or $25 per year for every $1,000 invested. That's a sizable premium, even compared to other crypto ETFs, considering you could just buy Zcash directly through a crypto exchange, with no management fee required.

As far as the cryptocurrency itself, Zcash could make sense if you're bullish on privacy coins. The Zcash ETF is a potential tailwind, since it enables institutional investors to buy Zcash. However, Zcash is also highly volatile and has already appreciated significantly this year. It shouldn't be more than a small position in your portfolio, and only if you're prepared to hold long-term through the ups and downs.