Crypto: Monero soars while Zcash falls

Monero (XMR) gained over 23% this week, while Zcash (ZEC) fell almost 25%. Such a gap highlights the high volatility of the privacy coin market, in a context of low activity linked to Thanksgiving. This divergence between two key confidentiality assets raises questions about the internal dynamics of the sector.

Monero on the rise

While the entire privacy coin sector has fallen by almost 40% this week, Monero is an exception. The XMR crypto rose by more than 23%, an intriguing surge in a gloomy context.

This increase seems largely fueled by the futures markets. The cumulative bid-ask volume delta on futures remains positive, while that of spot remains stable. Clearly, this upward dynamic is based on strong speculation via derivative products, notably perpetual contracts, and not on organic demand on the spot market.

Several technical elements help to explain this one-off performance of Monero, out of step with the rest of privacy coins:

• Persistent selling pressure on the spot market, with little support from traditional buyers;

• A positive imbalance in perpetual markets, signaling a leverage-fueled surge;

• The cumulative volume increasing on futures, according to on-chain data, in contrast to a relatively stable spot volume;

• The daily increase of 4.1%, while Dash lost 7.3% and Zcash 4.4%;

• No identifiable fundamental impulse (partnership, technological announcement), which confirms the speculative nature of the increase.

Indeed, Monero captured attention this week not because of any innovation or renewed interest in its technology, but because it was the vehicle for an opportunistic derivatives strategy. This dynamic, as rapid as it is unstable, could turn around suddenly if leveraged positions are liquidated without relay on the real market.

Zcash in free fall

Unlike Monero, Zcash saw a significant drop of 25% over the week. Some observers wrongly interpret this decline as a loss of interest in the project.

However, according to Quinten van Welzen, strategy and communications manager at Zano, this drop does not reflect a fundamental disaffection: “Short-term moves like Monero up and Zcash down mostly reflect positioning, leverage and timing, rather than a reversal in privacy demand”he said.

Such a correction is therefore part of a dynamic of capital rotation within the microcosm of privacy coins, where arbitrage is often exacerbated by low liquidity and strong speculation.

However, Zcash has a major advantage: the interest of institutional investors. Crypto asset manager Grayscale has filed with the SEC to convert its Grayscale Zcash Trust into an ETF. If this application is validated, it would be the first ETF backed by a privacy coin, which could pave the way for wider adoption of ZEC in regulated markets.

This perspective, although not yet implemented, represents a major strategic difference compared to Monero, often shunned by institutional players due to its total opacity.

Therefore, the evolution of Zcash's situation could well be determined by regulatory developments in the medium term, rather than just by the speculative dynamics observed this week. If the ETF is validated, it could catalyze a new wave of institutional interest in privacy coins. Conversely, a rejection by the SEC could reinforce the aversion of regulated markets towards this type of asset, in favor of more open or technically hybrid projects.