The New ZCash ETF Just Passed $915 Million in Assets. Is Zcash a Buy, Sell, or Hold Right Now?

On Sept. 8, the Zcash ETF (NYSEMKT: ZCSH), an exchange-traded fund (ETF) that holds the privacy coin Zcash (CRYPTO: ZEC), reported in a regulatory filing that its assets had topped $500 million. The filing arrived less than two weeks after the fund's listing on Aug. 25. By Sept. 22, it had more than $915.1 million in assets.

There are now clear signs that investors in the traditional financial sector are interested in getting exposure to Zcash as an investment, even if they don't insist on using its privacy technology with their own money.

What's more, the early traction of the Zcash ETF is a very favorable sign for the underlying Zcash crypto's future performance. When considered alongside the other factors affecting Zcash's price, it's another reason to think about buying the coin right now.

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The Zcash ETF now holds about 3.5% of all ZEC

The Zcash ETF is actually a converted trust that was first offered in late 2017 by its issuer, Grayscale.

The fund's recent growth was largely due to Zcash itself rising dramatically; the coin is up 203% so far this year. Outside investors added around $70 million in net inflows over the ETF's first couple of weeks, while a company affiliated with Grayscale contributed about $100 million. By Sept. 18, it had experienced more than $233 million in cumulative net inflows, including a $112 million day on Sept. 8 when the affiliate's contribution arrived.

The fund currently holds 596,269 ZEC, which is nearly 3.5% of the coin's circulating supply. Shareholders can't use Zcash's privacy features for those coins, so this is demand for ZEC purely as an asset. Still, it's good news to have an ETF buying because it restricts the coin's supply, which has a 21 million ZEC cap and periodic halvings of its mining reward, just like Bitcoin has.

And more ETFs are likely to launch if the coin keeps climbing, creating even more competition for the ever-declining drip of new supply.

Should you buy the coin, the ETF, or neither?

I'd say Zcash is worth buying today.

Given its scarce supply, privacy features, and the unambiguous demand signal that ETF purchases show, the coin could continue to lead this emerging crypto market cycle, and its 10-year track record will still count for something once this period of attention ends.

The Zcash ETF currently charges a 2.5% annual fee. While the fee is quite high for an ETF, it's ultimately an acceptable price to pay if you're not interested in shielding a coin so it can be held and transferred privately within Zcash's privacy-protected pools.

Otherwise, you can buy ZEC itself via a crypto exchange, and then learn how to store it in a wallet that supports its shielded addresses if elevated privacy appeals to you.

Alex Carchidi has positions in Bitcoin and Zcash. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.