The rapid rise of the privacy-focused cryptocurrency Zcash is being viewed by on-chain analysts as a serious red flag for Bitcoin. While retail capital was flowing into the asset amid the launch of spot ETFs, researchers recorded critical overheating in the derivatives market.
Historical data reveals a dangerous pattern: abnormal Zcash growth during periods of consolidation in the leading cryptocurrency often acts as a leading indicator of a marketwide correction.
According to data from CryptoQuant, the Zcash risk indicator has entered extreme territory, triggering a warning signal for BTC holders. The altcoin's rise comes as Bitcoin remains stuck within the $60,000–$80,000 range following its previous highs.
Analyst Maartun emphasized that the coin "just ripped 70% in a matter of days," which has left him "more worried about Bitcoin than excited about Zcash" under the current market setup.
According to the expert, this signal has historically preceded major sell-offs in the crypto market's flagship asset.
Is Zcash a bubble right now?
Technical metrics from CoinGlass confirm the local overheating, reinforcing analysts' warnings. Over the past 24 hours, the coin's daily trading volumes have fallen by approximately a quarter: spot volume declined by 24.97%, while derivatives volume dropped by 24.16%. The institutional hype surrounding the ETF has been fully priced in, and the asset's price has corrected to $779.38.
In the four-hour timeframe, futures selling increased dramatically, surging by 101.68%. At the same time, $1.53 billion in borrowed funds remains locked in Zcash margin positions, representing more than 11% of the coin's total market capitalization of $13.13 billion.
The situation is further fueled by comments from Galaxy Digital head of research Alex Thorn, who pointed to the lack of long-term interest in the ecosystem. Thorn criticized market participants who decided to "pump ZEC because it's 'private bitcoin'" and noted that account-based blockchains are "privacy nightmares" by design and are "substantially less private than UTXO-based chains like bitcoin."
If the $1.53 billion futures overhang begins to face forced liquidations, it could trigger a chain reaction across related trading platforms. For Bitcoin, which is experiencing a lack of buying activity within its current range, panic in the derivatives markets and an outflow of liquidity could become a trigger for a decline, potentially forcing many market participants into risk-off mode.
