Zcash Crashes 40% on Four-Year Bug Disclosure, Hayes Sells All

Zcash trades at $380 on June 6, attempting a partial recovery after crashing more than 40% from $675 following the disclosure of a critical vulnerability in the Orchard shielded pool that could have allowed counterfeit $ZEC minting to go undetected for over four years. Four years is a long time to leave a backdoor open, and the market is now doing the math.

$ZEC Daily Chart: All Four EMAs Lost in One Candle and the 200 EMA Is the Last Floor $ZEC /USD Daily Price Action (Source: TradingView)

The daily chart captures the scale of the damage. $ZEC had been building cleanly above all four EMAs since April with the Supertrend confirmed bullish at $621. The June 5 crash candle cut through the 20 EMA at $527.20, the 50 EMA at $490.31, the 100 EMA at $429.22, and briefly tested below the 200 EMA at $367.34 before recovering slightly. Losing all four EMAs in a single session on $12.58B in volume is a structural event, not a routine pullback.

The Supertrend at $621 has flipped bearish. The dotted ascending support trendline visible on the chart near $250 to $270 represents the macro uptrend from the October 2025 lows and held through every prior pullback in the rally. The 200 EMA at $367.34 is the immediate floor that needs to be held on a closing basis. A daily close below $367 opens the prior resistance zone near $300 to $320 and eventually the macro trendline near $270.

$ZEC Key levels for June 7: Resistance: $429 (100 EMA), $490 (50 EMA), $527 (20 EMA), $621 (Supertrend) Support: $367 (200 EMA), $300 to $320 (prior resistance), $250 to $270 (macro trendline)

The Vulnerability: What Happened and Why Uncertainty Is Still Being Priced Zcash developers disclosed a critical vulnerability in the Orchard shielded pool this week. The bug existed for approximately four years and could have allowed malicious actors to mint counterfeit $ZEC tokens with transactions that would be undetectable on-chain. The vulnerability was patched before public disclosure, but the Orchard pool's design makes it impossible to confirm whether the exploit was actually used during those four years. That unresolvable uncertainty is what the market is pricing, not the bug itself.

Nansen research analyst Nicolai Sondergaard told Decrypt that a patched vulnerability in a privacy coin would ordinarily be a footnote. The 40% move reflects the market appears to be pricing in uncertainty regarding the possibility of undetected inflation without a proposed network upgrade. Bitwise Research Analyst Ish Asad took the opposing view, arguing the market overreacted and that Zcash's fundamental story as a privacy-focused Bitcoin clone has not changed. Even after the crash, $ZEC remained up over 580% in the past year.

Arthur Hayes Sold Everything But Left the Door Open Hayes disclosed he sold his entire $ZEC position after the vulnerability disclosure, saying it violated his narrative mental map for the asset. His bullish framework was built on Zcash's zero-knowledge privacy being cryptographically sound. A four-year undetected vulnerability in the shielded pool directly challenges that premise.

Despite the full exit, Hayes added that privacy is priceless and that he has no issue buying back at higher prices if Zcash recovers. That positions him as a seller of uncertainty rather than a seller of the long-term thesis. A clean exit with an open re-entry door — the Hayes signature move.

$ZEC Derivatives: Fresh Shorts Building as Professionals Flip Net Short $ZEC Derivative Analysis (Source: Coinglass)

Futures volume jumped 9.51% to $12.58B, the largest single-day derivatives volume in $ZEC's history. Open interest rose 8% to $917M despite the price collapse, meaning fresh positions were opened into the move rather than existing ones closed. That OI expansion during a 40% drop points to short building. Short liquidations hit $45.92M over 24 hours against $22.21M for longs, confirming partial short squeezes on the recovery attempt.

The long/short ratio on Binance sits at 0.7346 with top traders running 0.6728 by accounts and 0.7267 by positions. Binance top traders currently show a net-short bias for the first time in $ZEC's current cycle.