Privacy coins gain 4.5% in a day, but the sector’s monthly losses signal deeper market unease

On Monday (June 8), privacy coins rose by 4.5%, where Monero increased by 7.6% and Zcash saw an increase of about 7%. However, the sector still trades at over 12% below its price from the beginning of the month amid concerns of a recent hack of the Zcash network.

Despite one day of gains, there still seems to be some doubt about the market. Privacy coins serve as an indication of market sentiment regarding risk-on and risk-off sentiments since privacy coins always come under the scanner of regulators in the crypto community.

But the price movement differential with respect to positioning highlights the fact that the crypto market is not sure of its current position.

Zcash Orchard vulnerability triggers market selloff despite successful patch

The monthly loss was a result of a vulnerability discovered on May 29 in the shielded pool of the Orchard protocol used by Zcash. A bug was detected in the zero-knowledge proof circuit that might allow malicious actors to perform invalid state transitions and create counterfeit tokens, as indicated by a notice on the Zcash Community Forum.

The Zcash Open Development Lab initiated several steps to address the issue, including a soft fork on June 1 in order to temporarily disable Orchard transactions; and a hard fork on June 3 to fix the circuit and restore full functionality.

There was no evidence of any exploitation taking place at the time. Zcash’s turnstile algorithm, which was designed to detect any illegal transactions of values between shielded and transparent pools, had not detected any violations. As a result, there had been no interruption in trading ZEC coins by exchanges.

Nevertheless, the consequences were primarily psychological. Zcash’s sentiment rating dropped from 163.9 on June 5 to virtually zero within several days, according to Santiment.

Likewise, Monero’s sentiment dropped dramatically from 35 to 1.72 after XMR was reported to be queued for audits along with ZEC.

According to ForkLog, ZEC plummeted by almost 50%, hitting a low of about $300, but eventually bounced back to around $470 as the software patch took effect.

Privacy coin network activity remains resilient despite price weakness

These bearish figures don’t tell the whole story, however. Network activity across the major privacy coins held up considerably better than token prices during the selloff.

Firstly, Monero’s daily transactions rose from 23,867 on June 7, to 28,558 on June 8, and 29,623 on June 9, while the mining hash rate was stable at 5.9 GH/s after a slight decline, according to BitInfoCharts statistics.

Meanwhile, Decred provided an even greater discrepancy. Its token value dropped 54% within 90 days, but the transaction number decreased only by 12%.

Dash, however, showed a different network activity. While the number of active addresses declined from nearly 66,000 late May down to roughly 34,000 now, exchange activity was growing and the volume of transactions within the last 30 days was about $2.96 billion, including one day of $210 million.

So, for those who view privacy coins as indicators of the altcoin sector in general, the network stats provide a complicated picture. Usage is holding; conviction among miners and transacting users has not broken.

Whales and smart money remain net short on Zcash and Monero

The positions held by whales and the institutions indicate that the rebound might be facing obstacles. The “smart money” group (whales with the best track record historically) has positions short by approximately $9.6 million and $1 million in Zcash and Monero, respectively.

Positions taken by whales for ZEC were below $410, and they currently show a return of 15-37% with total unrealized gains amounting to $8.5 million. For Monero, all the major whale positions are underwater with an entry range between $337-$407, though none have closed.

However, there is one special case here, which involves an increase in Zcash exchange inflows. In the past seven days, inflows reached $42.5 million – three and a half times higher than average levels.

Exchange inflow spikes often precede selling waves, and this signal seems to contradict the positive network activity metrics.

Ironwood upgrade seeks to verify Zcash supply and rebuild investor confidence

The Zcash ecosystem is preparing to implement the Ironwood upgrade in July 2026. The upgrade was designed to create the next shielded pool with the use of the Orchard circuit patch, backed by formal verification and independent audits.

Under Ironwood’s rules, new outputs in the old Orchard pool would be rejected after activation. Funds could exit only through Zcash’s turnstile, which enforces that no more ZEC leaves a pool than legitimately entered it.

The result: users running a node would be able to independently verify that the total circulating supply is correct, without trusting anyone’s assessment of whether the bug was exploited.

Zcash developer Sean Bowe revealed to Forklog that the ecosystem has reached consensus on the upgrade’s design. Wallets supporting Orchard will migrate funds to the new pool, a process that will require a single action from users.

The unresolved issue is whether Ironwood will manage to restore sentiment fast enough for the Monday rally to last. The next challenge faced by the privacy coin niche will be how global markets perceive the short covering and exchange flow signals in the days to come.

 

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