Concerns Grow Over Surge in ZEC's Unshielded Supply in 2026

As the markets evolve, the surge in unshielded supply for Zcash (ZEC) is raising alarms among traders. Unshielding refers to the process where funds are moved from privacy-protected pools to transparent addresses; a necessary step before trading on exchanges. Recent trends show a decrease in ZEC held in shielded pools, leading to various interpretations of future market movements.

Key Takeaways

Unshielding of ZEC has slowed down, with supplies in shielded pools decreasing to about 4.86 million ZEC.
A significant transfer of 74,002 ZEC worth approximately $35.75 million to Binance indicates possible selling preparations by a whale investor.
ZEC has experienced a capital outflow within the derivatives market, with short positions increasing.
While the broader altcoin market is recovering, ZEC has seen a decline in its price, creating concerns among investors.
Grayscale continues to view Zcash positively for 2026, citing potential growth in the privacy sector.

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The Unshielding Process and Its Implications

Unshielding converts ZEC from protected pools into visible addresses, usually before trading. However, this process has slowed, causing the quantity of ZEC in shielded pools to drop to approximately 4.86 million. This reduction follows a peak of over 5 million ZEC at the close of 2025.

ZEC Transfer Trends

Major Unshielding Event Preceding Exchange Activity

Recent data from Arkham indicates significant movements in ZEC holdings. A large deposit into shielded pools happened just two weeks before a substantial unshielding event. This data suggests that deposits into these pools are no longer increasing as they did in Q3 of 2025, indicating that bullish sentiment may not be as strong.

Moreover, on-chain monitoring service LookOnChain noted that a significant whale transferred 74,002 ZEC, valued at around $35.75 million, to Binance shortly after the unshielding event. This movement has sparked concerns among investors about potential selling strategies.

Investor Ted mentioned, “Seeing a whale send 74,000 ZEC to Binance definitely makes me pause. Moves like this are rarely random, usually positioning or liquidity prep.”

Privacy Sector's Struggles Amidst Market Recovery

In early 2026, although the overall altcoin market has shown recovery, increasing from $825 billion to $885 billion (around a 7% rise), ZEC's price has dipped from $530 to $490, reflecting a 7% decline. This discrepancy raises doubts regarding investor confidence in ZEC versus other cryptocurrencies.

Other privacy-focused coins, like Monero and Dash, have also lagged behind in this early year trading, indicating a broader weakness in the privacy sector, according to data from Artemis.

Grayscale has identified Zcash as an appealing altcoin for the upcoming year, anticipating continued growth within the privacy sector due to growing institutional interest in secure transaction capabilities.