- ZCash (ZEC) surged 19% on June 6, sharply outperforming Bitcoin (BTC) after a major selloff triggered by a disclosed protocol vulnerability.
- The privacy coin’s price had plummeted 57% in a day after a critical bug was found in the Orchard shielded pool, though developers confirmed no funds were stolen or counterfeit ZEC created.
- Heavy selling pressure was exacerbated by investor Arthur Hayes liquidating his entire ZEC position, citing an inability to cryptographically prove no counterfeiting occurred during the vulnerability window.
- Retail sentiment on platforms like Stocktwits swung to “extremely bullish” for ZEC, while Bitcoin ETF outflows and negative sentiment weighed on the broader market.
Zcash (ZEC) dramatically outperformed the crypto market on June 6, rallying 19% to approximately $369 as it recovered from a severe crash. Its rebound contrasted with a 2.6% drop in Bitcoin, which traded near $61,093, according to market data showing significant ETF outflows.
This rally followed a turbulent 24-hour period where ZEC collapsed from $624 to $264.80. The crash was triggered by the disclosure of a critical soundness flaw in Zcash’s Orchard shielded pool that had existed since 2022.
However, the vulnerability was discovered during an audit by security researcher Taylor Hornby on May 29. Zcash founder Zooko Wilcox-O’Hearn affirmed developers quickly implemented an emergency soft fork and subsequent hard fork to fix the issue.
Consequently, the Zcash team confirmed no funds were stolen and no unauthorized tokens were minted. The network’s Turnstile mechanism verified that no illicit value creation occurred while the flaw was active.
Meanwhile, prominent investor Arthur Hayes announced he had sold his entire ZEC position. Hayes stated his exit was due to the exploit, posting, “The Holy Trinity is dead.”
He elaborated that while counterfeiting was unlikely, it could not be formally proven impossible. This selloff marked a reversal from his previous stance, where he called ZEC his biggest non-Bitcoin position.
Retail sentiment on Stocktwits swung sharply to “extremely bullish” for ZEC during the recovery. Chatter levels also rose to “extremely high” as the token became a top-trending ticker on the platform.
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