Zcash Slides More Than 35% After Security Flaw Revealed

Zcash (ZEC) came under heavy selling pressure after a security vulnerability tied to its private transaction pool was disclosed, according to CoinDesk. The flaw could potentially enable the forging of ZEC, sparking concern that counterfeit tokens may have been created before the issue was patched. ZEC briefly dipped below $300 after the news, erasing billions of dollars in market value. The vulnerability is described as roughly four years old and linked specifically to Zcash's shielded (private) pool. Developers said the issue was patched this week. Investors' main focus has been whether the flaw was exploited prior to the fix, a question that is not immediately verifiable. The selloff followed a strong run: over the past month, ZEC climbed from under $200 in March to about $675 by the end of May. After the disclosure, panic selling set in. ZEC fell more than 35% within 24 hours and at one point was down more than 40% from its recent high. Analysts said the price pressure reflects uncertainty more than the technical problem itself. With limited ability to quickly confirm whether the vulnerability was used, markets tend to apply a larger risk discount. Nansen research analyst Nai Sondergaard said the move appears driven by uncertainty, while Bitwise research analyst Ish Asad noted that the privacy trade had been gaining traction and ZEC had already significantly outperformed bitcoin and other major cryptocurrencies heading into the announcement. Despite the sharp drop, ZEC is still up more than 580% over the past year. Before the decline, it had neared $700 and remained among the strongest-performing assets in crypto. Nansen's Jake Kennis said ZEC may need a clearer privacy-coin narrative, protocol-level catalysts, or renewed capital rotation into privacy assets to recover most of the losses. Separately, Arthur Hayes said on social media that he sold his entire ZEC position, while still expecting long-term demand for privacy assets.