ZEC returns as a risk-on crypto trade following reports of a two-week ceasefire between the United States and Iran.
The privacy-focused asset quickly moved higher as traders reacted to improved geopolitical sentiment. The rally placed ZEC among the top-performing cryptocurrencies of the day.
The token climbed above $320 during the surge, marking a strong recovery after recent weakness. Trading activity also increased sharply as market participants shifted toward higher-risk assets. The move aligned with a broader rebound across the crypto market.
ZEC gains momentum as market sentiment improves
ZEC benefited from a wider recovery after Bitcoin rebounded toward the $72,000 range. The privacy coin recorded gains of more than 21% within 24 hours. Daily trading volume surged close to $800 million, reaching its highest level in a month.
ZEC rallied to over $320 following a short squeeze and a general return to optimism for the crypto market. | Source: CoinGecko.
Derivatives data showed a clear rise in activity. Open interest increased by 26% in a single day, with much of the trading taking place on Binance. This reflected growing interest from short-term traders seeking quick opportunities.
Despite the recent surge, total open interest remains below levels seen at the end of 2025. It currently stands at around $386 million. This suggests the rally is still smaller compared to the strong breakout recorded last November.
The price action indicates that traders are willing to rotate into assets with strong directional potential. ZEC appears to have benefited from this shift in sentiment after months of weak performance.
Short squeeze fuels rally, but risks remain
Market data suggests that the recent rally may be driven partly by a short squeeze. Over $2.85 million in short positions were liquidated during the latest move. This added upward pressure as traders rushed to close losing bets.
Analysts note that ZEC could continue pushing higher toward the $330 range. However, resistance may emerge as short positions decrease. Without continued buying pressure, the rally could slow down.
The token has faced skepticism in recent months. Its late 2025 rally was heavily promoted by influencers, which raised concerns among traders. Some large holders also reduced their positions after that surge.
ZEC still maintains a visible presence across social platforms. Its market mindshare rose by 25% in the past day, reaching about 0.5%. This level remains relatively strong compared to other altcoins.
Privacy narrative and network activity remain steady
ZEC continues to attract attention due to its privacy-focused features. Shielded transactions have grown steadily, with total shielded supply surpassing 5.17 million coins. There are no clear signs of large-scale unshielding or selling.
Mining activity also remains strong and close to peak levels. This indicates consistent network participation despite price volatility.
The recent rally also supported other privacy coins. Monero posted modest gains, while smaller tokens in the sector moved higher alongside the broader market.
However, some risks remain tied to external factors. Interest in Solana-based DeFi has slowed following a recent security incident involving Drift Protocol. This has reduced confidence in related narratives that previously supported ZEC adoption.
ZEC now faces a key test. It must sustain momentum as a risk-on asset while maintaining its relevance in the privacy sector.
