Concerns Arise as Over 1% of ZEC Supply Unshielded in Early 2026

At the start of 2026, a substantial quantity of Zcash (ZEC) was unshielded and introduced into circulation, raising concerns about potential sell-offs, especially as privacy coins lag behind the wider market.

Key Takeaways

Over 200,000 ZEC, approximately 1.2% of its circulating supply, was unshielded in early January 2026.
This unshielding slowed growth in ZEC's shielded pools, which decreased to about 4.86 million ZEC.
A significant transfer of 74,002 ZEC to Binance from a whale has raised speculation about selling intentions.
ZEC's price fell from $530 to $490, even as the broader altcoin market showed growth.
Other privacy coins, including Monero (XMR) and Dash (DASH), are also experiencing a downturn.

In January 2026, more than 200,000 ZEC was unshielded, representing about 1.2% of its total circulating supply. This move, alongside a notable transfer to Binance, has raised alarms among investors about potential price impacts. Despite a recovery in the altcoin market, ZEC’s price has slipped, diverging from overall market trends.

Unshielding of ZEC Supply in Early 2026

Unshielding is the process of shifting funds from shielded pools, which maintain user privacy, to transparent pools. This action is often necessary for enabling trades on exchanges or for selling assets.

Data from the blockchain shows that in the first week of January 2026, a holder withdrew more than 200,000 ZEC from these shielded pools. This amount represents around 1.2% of the total circulating supply of ZEC, which has led to concerns about its implications on the market.

Following this unshielding, the total volume of ZEC held in shielded pools decreased to approximately 4.86 million ZEC after it had previously surged to over 5 million at the end of the previous year. According to Arkham’s data, this holder had deposited ZEC into shielded pools just a little over two weeks prior to their withdrawal.

The accompanying chart shows that deposits into shielded pools have not been accelerating lately as they did in the third quarter of 2025. Instead, the activity seems to have plateaued. While this does not definitively indicate a trend reversal, it does suggest that bullish momentum may be waning.

In the aftermath of the large unshielding action, on-chain monitoring platform LookOnChain reported that a whale transferred 74,002 ZEC—valued at roughly $35.75 million—to Binance just a day later. This transaction has sparked concerns among investors who believe it could signal a preparation for selling.

As one investor, Ted, stated, "Seeing a whale send 74,000 ZEC to Binance definitely makes me pause. Moves like this are rarely random; they typically suggest positioning or liquidity preparation."

ZEC's Challenges Amid Broader Market Recovery

In terms of market dynamics, ZEC has experienced significant derivative capital outflows over the past week, as outlined by CoinAnk. Additionally, short positions on ZEC appear to be on the rise.

Despite signs of recovery within the altcoin market—evidenced by a rise in TOTAL3 from $825 billion to $885 billion (a 7% increase)—ZEC's price has not fared well, declining from $530 to $490, which represents a drop of approximately 7%.

This disconnect between ZEC's price performance and the recovery of the overall altcoin market may prompt questions regarding whether investors are shifting their expectations away from ZEC in favor of other altcoin options.

Furthermore, it is worth noting that other privacy coins, such as Monero (XMR) and Dash (DASH), have also shown underwhelming performance in the early days of the year, making privacy coins the weakest-performing category, according to insights from Artemis.

Despite these challenges, Grayscale has recently spotlighted Zcash (ZEC) as a promising altcoin, anticipating continued growth in the privacy sector in 2026, driven by rising institutional interest.