Zcash (ZEC) is being removed from exchanges: will the trend continue in 2024?
On October 28, 2023, the Zcash protocol celebrated its seven-year anniversary since the mainnet launch. A lot has happened during this time: in 2019, the developers were able to fix a critical vulnerability in the zk-SNARKS protocol that allows the creation of an unlimited number of ZEC coins, and in 2022, Zcash withstood a spam attack on the network, in which some users accused the developers of the competing Monero project.
What is Zcash?
Zcash is an open-source blockchain focused on transaction privacy. The Zcash blockchain was launched in October 2016 and is based on Bitcoin technology. The native asset of this blockchain, ZEC, is categorized as an anonymous cryptocurrency.
There are two types of addresses in the Zcash protocol:
- public (T-addresses) similar to Bitcoin,
- private (Z-addresses).
Private addresses allow transactions without disclosing senders and recipients; only information about transfer amounts is entered into the public registry.
News and updates
In 2021, the Zcash team presented an "aggressive" roadmap outlining a plan for the project's development up to 2025. Some of the critical milestones of the roadmap were:
- Switching from Proof-of-Work to the Proof-of-Stake consensus algorithm. This move, according to the team, will be made not only to reduce power consumption but also to increase compatibility with other blockchains, add new protocol management mechanisms, and address transaction completion issues;
- Support interoperability with other blockchains. The Zcash team plans to implement Cosmos Stack tools to facilitate the transition to PoS.
The transition to Proof-of-Stake and support for interoperability with other blockchains is scheduled for 2024. In other words, Zcash will be more oriented towards the DeFi market, whose total blockchain assets (TVL) currently exceed $57.5 billion. The transition to Proof-of-Stake and integration with DeFi will attract more users to the ecosystem, expanding the applicability of the native ZEC cryptocurrency.
Zcash dynamics
For the last year, the ZEC cryptocurrency has been showing a negative trend: during this period, its rate fell more than twice from $48.08 to $23.31. In October 2023, growth resumed amid the general rise of the crypto market, and in December, the price of ZEC reached a local maximum of $33.57, up almost 40% from $24.16. However, the rate began to correct again amid the news of delisting from significant exchanges at the end of December.
The capitalization of Zcash also shows a negative trend: since January 2023, this indicator has decreased by 51% from $778.4 to $384.4 million. Just for the last month, the capitalization of the ZEC cryptocurrency lost almost 30%.
Regarding fundamentals, Zcash has strongly lost ground: since May 2021, the ZEC cryptocurrency has fallen from 51 to 135 lines of the CoinMarketCap ranking. The cryptocurrency has been displaced by many other new blockchain projects, such as:
- Injective,
- modular Celestia,
- ImmutableX,
- Mantle,
- Arbitrum,
- Aptos and others achieved high performance almost immediately after launch.
What should Zcash investors expect in 2024?
Analysts from Kaiko released a research report that noted that the liquidity of anonymous cryptocurrencies, such as Zcash, Monero, and Dash, has reached record-low levels amid their delisting (removal) from centralized exchanges.
Due to regulatory pressure, the largest crypto exchange, Binance, has put Zcash and Monero on the Monitoring Tag, a list of assets subject to regular inspections. If the company finds any non-compliance with regulatory requirements, ZEC and XMR may be excluded from the list of listed assets on the Binance exchange. In June 2023, the exchange refused to delist anonymous cryptocurrencies in the European Union even though the company announced earlier that month that it was ready to suspend trading in private altcoins.
In late December 2023, another well-known cryptocurrency exchange, OKX, announced the delisting of anonymous cryptocurrencies ZEC, XMR, and DASH. According to the company, the reason for deleting cryptocurrencies was "the impossibility of determining who exactly makes transactions with these assets." Information about the delisting hurt the ZEC cryptocurrency exchange rate: since December 28, 2023, the price of Zcash has fallen from a local peak of $33.57 to the current $23.31, that is, by about 44%. However, the general correction in the crypto market following the approval of the Bitcoin ETF in January 2024 has had little effect on ZEC's price performance.
Despite several issues related to strict regulation of anonymous cryptocurrencies, ZEC is still traded on major crypto exchanges such as Coinbase and Kraken.
Also, at the end of 2023, on-chain analysts recorded increased user interest in ZEC and other confidential cryptocurrencies. They attributed the increased interest to the growing demand for USDT stablecoin on the Tron network.
There will always be demand for private altcoins such as Zcash, Monero, and Dash. Still, due to regulatory complexities and other challenges, it is unlikely that these cryptocurrencies will join the market-leading digital assets.