MarketsShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailRecord High Bearish Bets on Zcash as Price Takes a Dive
Liquidations were minimal relative to the size of the decline, indicating that the selloff was primarily due to spot selling rather than a leverage cascade, while open interest in ZEC futures reached a record high as traders entered the market from the short side.
By Shaurya Malwa|Edited by Sheldon RebackUpdated Jun 5, 2026, 2:19 p.m. Published Jun 5, 2026, 12:54 p.m. 2 min readMake preferred on (Pexels/Pixabay)Key Points:
- Zcash's value plummeted following the revelation of a vulnerability in its Orchard pool, raising concerns about the token's supply integrity.
- Although the token saw nearly a 50% drop in just 24 hours, futures liquidations remained limited, with open interest reaching an all-time high, suggesting the decline was driven by spot selling and a surge in new bearish positions.
- Despite the recent drop, ZEC has increased by about 490% over the past year, and a price stabilization could lead to a short squeeze, although uncertainty remains regarding any potential exploitation of the vulnerability.
Bearish positions on zcash (ZEC) surged to unprecedented levels after the token experienced a dramatic decline of up to 50% within 24 hours due to the disclosure of a vulnerability in its Orchard pool.
According to CoinGlass data, ZEC faced approximately $118 million in forced liquidations during this time.
This amount is notably low given the significant drop in price, implying that the majority of selling was from holders of spot tokens rather than driven by futures trading. Only around 14% of leveraged zcash positions were liquidated; this figure would have been much higher if the decline had been fueled by a leverage cascade.
In contrast, bitcoin BTC$60,784.58 saw approximately $335 million in liquidations during the same period, despite only a minor decline in its price. Ether also faced a similar decrease, resulting in $278 million in liquidations.
Open interest, which represents the total value of open futures contracts, surged to an all-time high in ZEC terms, indicating that traders were predominantly opening new positions rather than closing existing ones.
The long/short ratio, which measures the number of traders betting on price increases versus those betting on declines, revealed a pronounced bearish sentiment. For instance, on Binance, the ratio for retail investors was 0.77, while whale accounts stood at 0.80 and whale positions at 0.85. Traders on OKX displayed even more bearish tendencies, with retail at 0.67 and whale accounts at 0.72. Only Bybit's retail traders showed a bullish inclination, with a ratio of 1.49.
Short sellers aim to profit from a decline in security prices by selling assets they do not own, expecting to repurchase them at a lower price later. Conversely, long investors buy securities to benefit from price increases.
The current ratio suggests zcash is heavily shorted following the recent drop driven by spot selling. Should the selling pressure decrease and prices stabilize, short sellers may be compelled to buy back shares to cover their positions, potentially leading to a rapid rebound.
It's important to note that even after losing over half its value in the last two weeks, ZEC remains up approximately 490% over the past year.
The Uncertainty Ahead
The price decline was triggered by the announcement from nonprofit Zcash developer Shielded Labs regarding a vulnerability in the Orchard privacy pool. This flaw could have allowed an attacker to create counterfeit ZEC that would go undetected.
This issue had existed since the pool's introduction in May 2022 and remained unnoticed for four years. It was identified only recently by security engineer Taylor Hornby, who utilized Anthropic's Opus 4.8 model, and it was patched by June 1.
The real concern lies not just in the flaw itself, which has been resolved, but also in what Shielded Labs disclosed alongside it. Due to the nature of Orchard's privacy features, there is no cryptographic assurance to determine if the flaw was exploited prior to its patch.
The organization stated that it is unlikely anyone exploited the vulnerability, but cannot confirm this, leaving a shadow of doubt over the token's entire supply.
Arthur Hayes, the chief investment officer of Maelstrom, indicated he sold his entire zcash position as a result of this uncertainty.
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