Raoul Pal Highlights Zcash Rally as Capital Rotation, Not a Structural Bull Market

The recent spike in the price of the privacy-focused cryptocurrency Zcash might indicate a temporary shift in capital rather than the beginning of a sustainable bull market, according to Raoul Pal, founder of Real Vision and a macro investor.

Key Takeaways:

Raoul Pal believes that Zcash’s rally appears to be a result of capital rotation rather than a clear indication of a long-term upward trend.
Despite a remarkable gain of 699% this year, the price of ZEC has seen a significant decline of about 37% over the past month.
Pal emphasizes that Zcash needs to establish a stable price foundation before its rise can be classified as structural.

During a discussion on the "When Shift Happens" podcast with host Kevin Follonier, Pal commented that Zcash’s recent price movements have yet to confirm it as part of a lasting trend instead of merely speculative activity in the wider crypto market.

"I don’t need to stake my claim to say I was in earliest," Pal noted, underscoring that mere price fluctuations do not provide a solid foundation for long-term investment confidence.

Raoul Pal Highlights Zcash Rally as Capital Rotation, Not a Structural Bull Market

Zcash’s Rally Experiences a Setback

Zcash (ZEC) has demonstrated impressive performance compared to other significant cryptocurrencies this year, soaring roughly 699% since January 1, bringing its price to around $385 according to CoinMarketCap.

However, the momentum has diminished in recent weeks, with the token experiencing a drop of about 37% over the last 30 days.

Pal highlighted the importance of understanding this distinction. "We can't confirm it until the overall market trends upward consistently, not just through rotation," he stated. "Currently, it aligns more with a rotation thesis."

For Pal, the next essential test for Zcash is whether it can form a stable support base following its rapid ascent. Sustaining support at lower price levels would suggest that investors are entering the market with long-term intentions rather than exiting post-surge.

"What you want to observe is if it establishes a base and begins to rise again," he explained.

Despite Zcash's impressive year-to-date achievements, Pal expressed hesitation in pursuing the asset at its current price levels. "I'm not inclined to chase it right now, but I might consider it during the next downturn," he added.

The surge in Zcash's value has been prominent even as the wider crypto market has struggled to maintain its upward trend. Its market capitalization expanded from below $1 billion in August to over $7 billion at its peak in early November, all while several major cryptocurrencies faced declines.

This upward movement was partly triggered by comments from crypto entrepreneur Arthur Hayes, who suggested in late October that Zcash could potentially reach $10,000, prompting a rapid short-term price increase.

ZEC surged nearly 30% within 24 hours of these comments.

Growing Institutional Interest in Zcash ETFs

Interest in privacy-oriented assets has also heightened due to rising concerns regarding surveillance, censorship, and regulatory factors.

In November, XT Exchange reported that anonymity-focused cryptocurrencies were regaining traction as traders reconsider the importance of privacy within digital assets.

Institutional interest has begun to grow as well. On November 27, Grayscale Investments took a significant step by filing with the US Securities and Exchange Commission to convert its Zcash trust into a spot ETF, indicating a potential avenue for broader investor access.