Delphi Digital researcher Simon Shockey is arguing that the true story in Zcash is now not simply its value – regardless of ZEC having one of the vital eye-popping rallies of this cycle in current months. “Probably the most fascinating factor about ZEC at the moment will not be the value,” he wrote on X. “It’s the truth that a GBTC-style low cost dislocation simply appeared round ZCSH.”
For Shockey, the Zcash belief setup solely is sensible when seen by way of the lens of what occurred with Grayscale’s Bitcoin product. He reminds readers that “funds had been constructed, and later blown up, on two totally different GBTC trades.” The primary was the premium arbitrage, the place Grayscale allowed accredited traders to subscribe at NAV with a six-month lock whereas GBTC traded at a “~30–40%” premium in public markets.
Will Zcash Observe The GBTC Playbook?
The playbook, he writes, turned nearly mechanical: “subscribe at NAV, lock for six months, hedge BTC publicity with CME shorts, promote GBTC at a premium, pocket the unfold and lever it.” It was so broadly adopted that “each TradFi household workplace, hedge fund vacationer, and crypto-native desk was operating it. It turned the commerce. Till, properly, it didn’t…”
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In February 2021, after years of buying and selling wealthy to NAV, GBTC flipped to a reduction. Anybody mid-lockup was now lengthy an over-priced wrapper, paying to keep up a hedge and watching the low cost widen to “-30%, -40%, even -45%.” Shockey calls that dislocation “profession/cycle-ending nearly in a single day,” and notes that it helped detonate gamers like 3AC, BlockFi, Genesis and DCG.
However he stresses that GBTC’s story had a second act: as soon as the low cost was entrenched, “a distinct commerce emerged: purchase GBTC at a reduction, watch for regulatory readability or ETF approval, redeem at NAV, seize the collapse within the low cost.” Worth-oriented funds “had been early and underwater for some time. However they had been finally proper. The low cost evaporated as ETF approval turned inevitable.”
Shockey’s competition is {that a} structurally comparable part could now be opening round Grayscale’s Zcash belief. “This morning Grayscale filed to transform ZCSH, their Zcash belief, into an ETP,” he writes. “That submitting instantly creates the early define of a GBTC-style low cost commerce.”
He highlights that ZCSH just lately traded round 33.50 {dollars} per share, regardless that “yesterday’s belief knowledge, with a decrease ZEC value, confirmed NAV round forty-one {dollars} per share.” By his math that’s “nonetheless near a 20 p.c low cost. Each ZCSH share is priced materially under the ZEC it represents.” With an implied 0.0817 ZEC per share, “you’re successfully getting ZEC publicity at ~$410 per ZEC when spot is properly above that.”
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The important thing structural shift is the proposed transfer from a closed belief to an exchange-traded product with redemptions. “The present belief construction doesn’t permit redemptions,” Shockey notes. “The proposed ETP would, with one-to-one withdrawals of the particular ZEC held.” If regulators log out, “the low cost ought to tighten and ZCSH ought to transfer towards NAV. That is precisely what occurred with GBTC as ETF approval turned extra reasonable.” He’s cautious so as to add: “Not assured. Not the identical commerce. However structurally very comparable.”
On the money-making angle, Shockey is express. “The low cost closing is the cleanest angle. Shopping for ZCSH at a 20 p.c low cost and promoting after convergence is the purest model of the commerce.” Past that, “there’s optionality if ZEC rerates throughout the approval window. If the privacy-oriented store-of-value narrative strengthens, ZEC can rise whereas the low cost closes. That creates a second leg of upside that GBTC didn’t supply till very late.”
He argues {that a} ZEC ETP “might unlock new demand,” since “most funds/traders can not maintain ZEC instantly resulting from custody and mandate points. An ETP solves that. New swimming pools of capital typically tighten reductions by themselves.”
Narrative and political tailwinds, in his view, are actual. “Bitcoin’s lack of privateness is again in focus. The quantum-risk dialogue is getting louder.” He factors to mainstream airtime, together with feedback from VanEck’s CEO about Bitcoin’s shortcomings and ZEC as a possible hedge, as a sign that the story has escaped pure crypto-Twitter.
His closing abstract captures the uneven, time-bounded nature of the wager: “If markets preserve leaning towards the concept that ZEC is absorbing the position Bitcoin stepped away from, then ZCSH turns into the cleanest automobile to specific that view. You get ZEC publicity in public markets, which might turn out to be a serious driver of rerating as flows choose up, plus a built-in twenty p.c low cost that solely exists till the ETP is permitted. ZODL?”
At press time, Zcash traded at $509.84.
Featured picture created with DALL.E, chart from TradingView.com
