The privacy coin sector is back in the spotlight, prompted by BitMEX co-founder Arthur Hayes urging Zcash holders to withdraw their assets from centralized exchanges (CEX).
On Wednesday, Arthur Hayes stated that holders should "shield" their assets, a feature that allows for private transactions within the Zcash network. Hayes wrote on the X platform: "If you hold ZEC on a CEX, please withdraw to a self-custody wallet and perform the shielding operation."
This statement comes as Zcash has experienced significant price volatility in recent days. The token surged to $723 on Saturday, then dropped to $504 on Sunday. It rebounded to a high of $677 on Monday but quickly fell again. As of the time of writing, ZEC is around $450, down 37% from Saturday's peak.
Analysts have warned that ZEC may experience a sharp correction, as its relative strength index (RSI) reached a peak reading after continuing to rise into overbought territory.
Zcash's privacy model is unique, supporting two types of addresses: transparent addresses (i.e., "t-addresses") and shielded addresses (i.e., "z-addresses").
The former is similar to a regular public wallet, while the latter uses zk-SNARKs (zero-knowledge proofs) to hide the sender, receiver, and transaction account information.
However, CEXs typically only support the transparent version of ZEC, meaning transfers made through exchanges are fully traceable on-chain. Only through self-custody wallets that support zk-SNARK operations can true privacy attributes be achieved in shielded transfers.
Arthur Hayes is calling on users to withdraw their coins and shield them. Essentially, this responds to a long-standing criticism from the privacy community: that exchange custody undermines the anonymity that Zcash was originally designed to provide.
If ZEC tokens are held on a CEX, their privacy is compromised. Additionally, the tokens face risks of withdrawal freezes, know-your-customer policies, and delisting, similar to the risks faced by Monero (XMR) in recent years.
Hayes' comments highlight the trade-off between convenience and sovereignty. Self-custody protects users from bankruptcy and regulatory actions, including asset freezes or delistings.
At the same time, this requires users to take on greater responsibility, including managing private keys, maintaining backups, and using verified wallets.
Despite the recent decline, Zcash remains a key player in the privacy coin narrative, with a market capitalization of $7.4 billion.
According to CoinMarketCap, despite the drop from Saturday's high, the token has still risen 5% over the past week.
In addition to Zcash, Monero remains one of the top privacy coins, valued at $7 billion. The token has increased by 7% over the past week.
Meanwhile, other participants such as Canton (CC), Dash (DASH), Decred (DCR), and ZKsync (ZK) have suffered losses ranging from 13% to 42% over the past seven days.
Related: Coinbase Business launches in Singapore, reshaping the payment landscape
Original article: “Arthur Hayes urges Zcash holders to withdraw from centralized exchanges (CEX) and ‘protect’ their assets”
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