#ZEC Why did ZEC fall much more sharply than the overall market?

ZEC's sharp decline has its own independent, deadly catalyst separate from the macro pullback of BTC/ETH.
According to CoinDesk and Yahoo Finance: Non-profit development organization Shielded Labs revealed that Zcash's Orchard privacy pool has a serious vulnerability that has been lurking for about four years since its launch in 2022. If exploited, this vulnerability could allow attackers to forge unlimited ZEC without trace.
The vulnerability was discovered on May 29 by security researcher Taylor Hornby (reportedly aided by Anthropic's Opus 4.8 model). The official response involved an emergency fix through a soft fork and a hard fork with NU6.2 on June 1–2.
It has been confirmed that the real damage point was not the bug itself (which has been fixed), but Shielded Labs' admission: due to the characteristics of the Orchard privacy mechanism, cryptographic methods cannot prove whether the vulnerability was exploited before it was fixed.
Officially, they judge "very likely not," but cannot be certain. This "unverifiable" supply integrity doubt cast a shadow over the entire token—plus trader Arthur Hayes was reported to have liquidated his holdings, further amplifying panic.
This is also why ZEC's decline (about 50%) far outpaced the market (BTC down about 14% during the week).
To understand this crash, one must first understand the previous surge. According to BitX research review, ZEC's strong performance in May 2026 was driven by three mostly structural catalysts:
First, on May 19, the SEC ended a two-year investigation into the Zcash Foundation without enforcement action, clearing a regulatory hurdle;
Second, on May 6, Multicoin Capital publicly disclosed its ZEC holdings, triggering a short squeeze from about $351 to $515 in a single day;
Third, debates over "wealth tax" in California and OECD strengthened the narrative of financial privacy, attracting institutional attention to privacy coins for the first time since 2021.
In other words, ZEC was previously a highly crowded target rapidly driven up by "narrative + short squeeze," accumulating a large amount of profit-taking and fragile positioning. The vulnerability disclosure was just the spark that ignited the fire.
It has been confirmed that both technical and emotional factors are weakening: ZEC has confirmed a suspected head-and-shoulders top pattern, declining from previous cycle highs (around $723 in November 2025 and about $670 in May 2026).
The probability of "ZEC falling below $100 in 2026" on Polymarket once rose to 28%.
All these indicate that the market's pricing of its downside risk is systematically rising. $ZEC