Key Takeaways Is ZEC rally just another pump-and-dump?

ZEC has 30% of its supply in shielded pools, signaling real utility and investor conviction.

Can Zcash truly rival Bitcoin in Q4?

With a parabolic surge in the demand for privacy assets, Zcash’s setting itself up as Bitcoin’s strongest alt contender this cycle.

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Zcash [ZEC] has been stealing the spotlight. The privacy coin pulled off a staggering 483% rally in October alone, making it the top-performing asset of Q4 so far. Naturally, that kind of move triggers some serious FOMO.

On the derivatives side, Open Interest (OI) in ZEC has surged from around $36 million at the start of October to roughly $663 million at press time.  That’s a massive $627 million in fresh liquidity flowing into ZEC perps.

But as always, the line between conviction and pure hype is razor-thin. 

What starts as FOMO can flip into a liquidation chain reaction once the market overheats. And yet, even after its parabolic leg-up, ZEC’s market structure suggests it could keep pulling capital away from Bitcoin [BTC].

When ZEC goes vertical, BTC tends to catch the downside

A clear technical divergence can be seen when charting ZEC against BTC.

Looking back at the 2021 cycle, BTC topped out at $63k in Q2 and $64k in Q4. Notably, both instances saw ZEC print local highs around $314 and $294, respectively, before bleeding into a multi-year accumulation range.

In short, ZEC moved in lockstep with BTC back then. The ZEC/BTC ratio reflects that correlation perfectly. The pair topped at 0.007 during those peaks, before basing out at 0.0003, where it’s been chopping ever since.

Fast-forward to now, the ratio is up more than 485% since Q4 kicked off.

Simply put, Zcash has crushed Bitcoin this quarter. The ratio’s breakout signals clear capital rotation. Backing this, BTC closed the month 4% lower while ZEC went vertical, showing where market flows have been rotating.

However, does this move have legs for a sustained breakout, or is it just another short-lived “pump-and-dump” cycle? Either way, the outcome here could set the tone for the next leg in this Bitcoin–Zcash divergence.

Investor confidence gives Zcash real staying power

ZEC’s run from $74 to over $450 in a month has clearly ignited FOMO.

However, the rally hasn’t come at the cost of fundamentals. Around 4.5 million ZEC (30% of supply) now sit in shielded pools, with nearly 50k ZEC getting shielded daily during this leg, reflecting serious on-chain usage.

For context, shielded pools are where Zcash holders move their coins for private transactions. Naturally, the more ZEC that gets shielded, the higher the real privacy usage ( a core utility metric for the network).

Against this backdrop, Zcash’s rally looks more than just a hype cycle. 

Instead, it signals renewed confidence in privacy tokens, giving Zcash a clear edge in the sector. For instance, Monero [XMR] hasn’t cracked 15% shielded usage in over a decade, while Zcash has already doubled that.

In this context, is Zcash shaping up to be the next big rival to Bitcoin? With the technical divergence, Zcash’s on-chain edge, and growing investor demand for privacy assets, it wouldn’t be too far-fetched to think so.

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