In crypto, reversals of fortune can happen unexpectedly and in direct contradiction to the previously established context, like what's going on with Zcash (ZEC 23.24%) right now. The leading privacy coin has already staged a huge comeback this year, climbing from around $50 in mid-September to its recent highs above $700 before settling nearer the $450 range.
Now it's getting a shocking new catalyst that almost nobody expected, and the implications for its entire narrative are significant. Its price might even reach $1,000 next year. Here's what's going on.
Image source: Getty Images.
This could be a turning point
Zcash's history is marred by difficulty. Regulators tend to dislike privacy coins, as they can be used to conceal illicit activities, such as money laundering. In many of the most important jurisdictions for the crypto sector, crypto exchanges that choose to list privacy assets have traditionally faced significant pushback and regulatory scrutiny.
In some cases, like with the major crypto exchange OKX, that pushback resulted in the delisting of privacy coins, including Zcash. That was a major setback, as when cryptocurrencies aren't purchasable on the exchanges investors use the most, it limits the capital inflows and thus tends to significantly depress their growth ceiling.
But as of Nov. 24, OKX re-listed Zcash. And there's ample reason to believe that it's going to be a major catalyst for the coin.
CRYPTO: ZEC
Key Data Points
OKX started in China and serves millions of users worldwide, while still explicitly catering to Chinese-speaking investors. Whereas mainland China maintains a formal ban on cryptocurrency trading and has declared all crypto transactions illegal, including those via offshore exchanges, Hong Kong provides legal paths for Chinese customers who independently seek out these platforms. In other words, OKX cannot advertise directly into mainland China, but it is still arguably the top offshore exchange used by Chinese retail investors -- and that's a demographic with a colossal amount of capital which hasn't had the opportunity to invest in Zcash and other privacy assets for at least the last couple of years.
If even a slice of that group turns into sustained inflows, it is likely that Zcash will capture a portion of the new capital, and it might retain it too. Furthermore, the listing is arriving just as Zcash has abruptly become one of the most talked-about assets in the market (at least among crypto natives) after years of being forgotten and with its price in the doldrums.
This means that the OKX listing shows that at least one major crypto exchange believes Zcash can be operated legally within a bunch of different and constantly evolving regulatory expectations. For a project whose biggest bearish argument has long been that regulators will ban it or make it difficult to buy, this is a major update to the investment thesis, as the bearish view is now somewhat less plausible than before.
What else has to go right?
Zcash climbing to $1,000 and beyond is no longer a pipe dream. But investors should take care to appreciate that there are still a lot of near-term headwinds (as well as longer-term headwinds) that make this a fairly risky investment despite its merits.
A move to $1,000 would require more than doubling its market cap today to reach $17 billion. It's already up by 690% this year so far. Buying the coin after it just made such a wild move means risking that the momentum will peter out.
Additionally, regulation remains a significant concern, and it is not yet settled anywhere in the world in any way, shape, or form. There is no guarantee that OKX or any other exchange will continue to list Zcash if the policy shifts against privacy assets again. OKX's decision is a data point that shows attitudes can quickly soften when there's obviously money to be made, but it does not guarantee that de-listings are a thing of the past.
There's still an abundance of uncertainty that'll need to be navigated over the next few years. Therefore, a long-term investor's perspective on Zcash following this catalyst is as a high-risk, high-reward play, suitable only for purchasing in small quantities and then holding for extended periods. This coin is definitely not a good choice for risk-averse or impatient investors.
