Bearish bets on privacy-focused zcash (ZEC) hit a record as the token fell 50% in 24 hours following the disclosure of a now-patched vulnerability in its Orchard pool.
ZEC recorded approximately $118 million in forced liquidations during the period, according to CoinGlass data.
This is remarkably small for a token that halved in price, suggesting that the selling was primarily from tokens held in spot rather than a futures-driven move. Only about 14% of zcash’s leveraged positions were wiped out; this figure would have been much higher if a cascade of levers had led to the fall.
In comparison, around $335 million in Bitcoin Tracked futures contracts sold off during the same window, even though the largest cryptocurrency only fell a few percent. Ether slipped a similar amount and liquidated $278 million.
Open interest – the total value of unsettled futures bets – hit a record high in ZEC terms, suggesting traders opened new positions rather than closing them.
The long/short ratio, or the number of traders betting on an increase versus a decline, shows that these positions are biased to the downside. On Binance, the ratio was less than 1 for retail investors at 0.77, whale accounts at 0.80, and whale positions at 0.85. Traders on OKX were more bearish, with retail accounts at 0.67 and whale accounts at 0.72. Only Bybit retail traders were long, at 1.49.
Short investors sell securities they don’t actually own, betting that the price will fall before they have to close their positions and that they will profit on the difference. Long investors hold the stock to benefit from any increases.
The ratio indicates that zcash is heavily shorted after a spot decline. If sales slow and prices stabilize, these shorts could be forced to buy to cover their positions, fueling a strong rally.
It is worth remembering that ZEC, even after losing more than half of its value in two weeks, is still up around 490% over the past year.
No way of knowing
The catalyst for the price drop was Zcash’s non-profit developer Shielded Labs’ disclosure of a vulnerability in Zcash’s Orchard privacy pool that, if exploited, could have allowed an attacker to create a counterfeit ZEC that no one could detect.
The Orchard Rift had been active since the pool’s debut in May 2022, going unnoticed for four years. It was discovered last week by security engineer Taylor Hornby using Anthropic’s Opus 4.8 model and urgently fixed on June 1.
The damage is less about the bug itself, which is now fixed, than what Shielded Labs admitted next to it. Because of the way Orchard privacy works, there is no cryptographic way to prove whether someone exploited the flaw before it is patched.
The company said this is probably not the case, but it cannot be sure, and this uncertainty looms over the entire token supply.
Arthur Hayes, Maelstrom’s chief investment officer, said he sold his entire zcash position as a result.
