ZEC surges 30% behind the scenes: Multicoin's accumulation, short liquidations, and structural reassessment of privacy coins

On May 5, 2026, the crypto market experienced a long-awaited rally in privacy coins. The native token of Zcash, ZEC, surged significantly after Tushar Jain, co-founder of Multicoin Capital, publicly disclosed his holdings, with the price jumping from around $432 to nearly $600. As of May 7, 2026, according to Gate data, ZEC is trading at $539.22, up 65.02% over the past 7 days, with a 112.05% increase over 30 days, and its market cap rising to approximately $8.99 billion. More notably, ZEC has gained over 1,299.56% in the past year.

This is not just a simple news-driven rally, but a market driven by a combination of institutional narrative reconstruction, derivatives market squeezing, and on-chain fundamentals improving.

Multicoin Reveals Heavy Holdings, Price Responds with a Surge

On May 5, 2026, Tushar Jain, co-founder and managing partner of Multicoin Capital, publicly announced during the Consensus Miami conference that the firm had established a “significant position” in ZEC since February 2026. Reports indicate that the fund began accumulating in batches when ZEC was priced between $237 and $299.

Following the disclosure, ZEC’s price rapidly surged from about $432, reaching a peak of $593, with an overall increase of over 80% in six days, setting a new high for the year. The total 24-hour market trading volume briefly exceeded $1.6 billion, with perpetual futures trading volume surpassing $1.3 billion, and open interest around $1.1 billion.

Jain described ZEC as “the purest way to express privacy and anti-seizure themes on the open market.” This statement redefines the narrative of privacy coins from an ideological preference to a rational investment strategy based on macro policy risks.

Tracing the Path from Bottom to Explosion

The following timeline highlights key nodes in this round of ZEC’s rally, aiming to restore the full logical chain behind the price movement:

This timeline demonstrates that ZEC’s rise was not driven by a single event but unfolded along a path of “regulatory pressure bottoming out—technological upgrades gathering strength—improving compliance environment—institutional entry verification—retail channels opening—narrative ignition.” The SEC investigation’s conclusion removed a key legal uncertainty, while Multicoin’s disclosure served as a catalyst for the rally.

On-Chain, Derivatives, and Spot Market Panorama

On-Chain Data: Structural New Highs in Privacy Adoption

By the end of April 2026, the amount of ZEC stored in shielded pools accounted for about 31% of circulating supply, with shielded transactions rising to 59%, both hitting record highs. About a year earlier, the proportion of holdings in shielded addresses was only around 11%.

This data indicates not only speculative buying but also a growing actual demand from users for Zcash’s core privacy features. When over 30% of circulating supply is actively locked in shielded addresses, and nearly 60% of transactions involve shielded pools, the rise of ZEC should no longer be viewed as purely hype-driven.

Derivatives Market: Short Squeeze Amplifies Price Volatility

ZEC’s rally was accompanied by large-scale liquidations of short positions. On May 5, about $47 million in ZEC was liquidated, ranking second among all crypto assets after Bitcoin. Over 48 hours, total liquidations reached approximately $62 million, mostly from short positions.

On May 6, a whale holding 18,286 ZEC short positions (address “0x320”) deposited an additional $5M USDC to avoid forced liquidation, with unrealized losses exceeding $2.36 million, and a liquidation price of $855.34. The whale was later reported to have fully closed the position, with total losses around $6.54 million.

Perpetual futures open interest was about $1.1 billion, with funding rates turning positive, and over 5,000 traders faced liquidations.

Short squeeze was a key short-term driver of this rally. When prices quickly break through critical resistance levels, short positions are forced to close or add margin, leading to concentrated buying that further pushes prices higher, creating a positive feedback loop. However, this also means that once the squeeze momentum exhausts and spot demand is insufficient, the risk of a sharp correction increases.

Spot Market: Divergence of Inflows and Outflows

Despite large inflows into futures markets, some exchange net flow data show notable net outflows in spot during the rally.

This “strong futures-driven, spot outflow” structure suggests some traders are taking profits during the price increase. Market structure analysis indicates that if spot selling pressure persists while leverage longs remain crowded, ZEC could face a larger correction triggered by forced liquidations of longs, with liquidity clusters below suggesting a potential retest of the $500–$480 zone.

Multicoin’s “Anti-Seizure Asset” Narrative

Core Narrative: From Privacy to Anti-Seizure

In his Consensus Miami speech, Jain explained Multicoin’s core investment logic: while Bitcoin has censorship resistance at the protocol level, its transparent ledger allows ownership to be traced. If governments or creditors can link Bitcoin addresses to individuals, these assets face risks of taxation, freezing, or confiscation. Zcash’s built-in privacy mechanisms can hide transaction details and user identities, structurally solving this problem.

Multicoin’s argument is not positioning Zcash as a Bitcoin replacement but adding a “hidden ownership” layer of defense on top of Bitcoin’s anti-censorship foundation. In traditional finance terms, this is akin to holding gold versus holding an anonymous offshore trust—gold as a store of value, and the trust providing an additional legal protection layer.

California Wealth Tax: A Tangible Anchor for the Narrative

California officially implemented a billionaire wealth tax law on January 1, 2026, imposing a one-time 5% tax on assets exceeding $1 billion. Jain explicitly mentioned this policy in his speech.

The implementation of this law provides a tangible anchor for the “anti-seizure asset” narrative. Whether other jurisdictions follow suit remains to be seen, but California’s move—one of the world’s largest economies—validates the narrative that “the era of wealth taxes is arriving,” which will continue to drive structural demand for privacy assets.

Shift in Stance: From 2019 to 2026

In 2019, Multicoin argued that privacy was “a feature of valuable cryptocurrencies, not an independent product,” questioning whether users should be forced to sell Bitcoin or Ethereum to acquire ZEC for privacy reasons. Seven years later, Multicoin not only disclosed a large position in ZEC but also elevated the privacy narrative from a technical feature to a macro hedging strategy.

This shift likely reflects two changes in judgment: first, stricter regulations make privacy no longer just a “nice-to-have” but a core necessity in high-net-worth asset allocation; second, the shielded pool adoption rate in Zcash surpassing 30% indicates the network’s product-market fit has reached a new critical point.

Market Divergence on Narrative

It’s worth noting that the market does not uniformly accept this narrative. Some analysts point out that this rally heavily relies on a single fund’s disclosure, lacking verification signals from multiple institutions. If Multicoin’s position information becomes the sole bullish anchor, the market could face a quick reversal once upward momentum wanes.

Additionally, some believe that the current rally is more driven by short squeeze than broad spot demand. Once short-term leverage clearing concludes, whether prices can sustain at higher levels will depend on genuine spot buying strength.

Industry Impact Analysis—Has the Privacy Track Entered a Turning Point?

ZEC’s sharp rise is prompting the market to reassess the value logic of the privacy sector. Previously, privacy coins were stuck in “niche functions, heavy regulation, and liquidity shortages.” Multicoin’s involvement, at least in terms of narrative, redefines privacy assets from ideological preferences of the crypto native community to strategic assets targeting high-net-worth individuals and institutional investors.

From an industry landscape perspective, the following changes merit ongoing attention:

First, the competitive landscape between Zcash and Monero is reshaping. Monero’s default full-anonymity design offers stronger privacy but has also faced harsher regulatory backlash—leading to delistings from major exchanges. As of May 2026, Zcash’s market cap is about $9 billion, surpassing Monero’s approximately $7.6 billion, indicating a shift in the privacy sector’s “leader” position.

Second, the trend of integrating privacy with DeFi is worth watching. At Consensus Miami, Solana Foundation teams mentioned ongoing privacy product development, with wrapped ZEC on Solana having previously traded over $15 million. Zama’s fully homomorphic encryption proposals could enable private composability in DeFi.

If “privacy + DeFi” infrastructure matures gradually, Zcash, as one of the most liquid privacy assets, could benefit from broader ecosystem expansion beyond a single “privacy payment” narrative.

Conclusion

ZEC’s recent surge is not a traditional “news-driven rally.” Before Multicoin’s disclosure ignited the market, the Zcash ecosystem had already undergone months of structural accumulation: shielded address usage rising from 11% to 31%, shielded transaction ratio reaching 59%, inflation rate effectively decreasing after the third halving, regulatory uncertainty alleviated by SEC’s investigation conclusion, institutional and retail access via Grayscale Trust and Robinhood expanding, and macro narratives driven by California’s wealth tax implementation.

Multicoin’s role was to leverage its institutional credibility to provide a “visible” catalyst for this valuation logic. However, the subsequent market trajectory depends on whether these structural improvements can be sustained and whether more institutional funds and on-chain demand follow through. Whether the privacy sector’s inflection point has truly arrived will ultimately be answered by data, not narratives.