Grayscale's Zcash ETF Bid: Is ZCSH Poised for a GBTC-Style Price Rollercoaster?
The cryptocurrency market is abuzz with speculation as Grayscale files to convert its Zcash Trust (ZCSH) into an Exchange Traded Product (ETP). Delphi Digital researcher Simon Shockley argues that the real story for Zcash (ZEC) isn't merely its recent price rallies, but rather the potential emergence of a "GBTC 2.0" scenario, mirroring the dramatic premium-to-discount journey of Grayscale's Bitcoin Trust (GBTC). This structural shift, he posits, presents a unique investment opportunity for those paying attention.
Recalling the GBTC Playbook
Shockley draws parallels to the early days of GBTC, where accredited investors could subscribe at Net Asset Value (NAV) with a six-month lockup, while GBTC traded at a significant premium (30-40%) in public markets. This allowed for a lucrative arbitrage strategy: subscribe at NAV, short Bitcoin exposure with CME futures, and sell GBTC at a premium after the lockup, pocketing the spread. This "playbook" became widespread among institutional players. However, this dynamic dramatically reversed in February 2021 when GBTC flipped to a discount, leaving many holding an "over-priced wrapper" and contributing to the downfall of firms like 3AC and BlockFi. The GBTC story, however, had a second act. Value-oriented funds began buying GBTC at its steep discount, anticipating eventual regulatory clarity or an ETF approval that would allow redemption at NAV. This strategy proved prescient, as the discount evaporated with the approval of Bitcoin ETFs. Shockley believes a similar structural setup is now forming around Grayscale's Zcash Trust.
The Zcash Opportunity: A Structural Arbitrage?
With Grayscale's filing to convert ZCSH into an ETP, an "early outline of a GBTC-style discount trade" has emerged. ZCSH shares are currently trading at approximately $33.50, while ZEC's NAV sits around $41 per share, indicating a roughly 20% discount. Each ZCSH share represents about 0.0817 ZEC. This means that, effectively, investors can gain ZEC exposure at a significant discount, even as the spot price for ZEC trades higher. Shockley highlights the "money-making angle" as the purest play: buying ZCSH at a discount and waiting for the proposed ETP approval to close the gap. He further suggests an optionality if ZEC itself re-rates higher during this approval window, driven by a strengthening privacy-oriented store-of-value narrative amid renewed focus on Bitcoin's privacy limitations and discussions around quantum risk. This potential for ZEC to appreciate while the discount converges could offer a "second leg of upside that GBTC did not offer until very late." As institutions face custody and mandate issues preventing direct ZEC holdings, an ETP could unlock new demand, further tightening discounts as capital flows in.
