Grayscale's Zcash exchange-traded fund (ZCSH) has reached $1 billion in assets under management one month after beginning trading on NYSE Arca on August 25, but flow data reveals that price appreciation of the underlying asset, rather than new investor capital, accounts for most of the growth.
As of September 24, the fund held $1 billion in net assets while recording only $306.12 million in cumulative net inflows. This means new money represented less than 30% of the fund's value on that date.
How the Fund Grew So Quickly
The ZCSH ETF was not created from scratch but rather converted from Grayscale Zcash Trust, an existing vehicle formed in October 2017. The fund therefore launched with years of accumulated Zcash holdings already in place.
The primary driver of asset growth has been the appreciation of Zcash itself. The token was trading around $1,540 as of the article's reporting, roughly double its price when the ETF debuted on August 25.
Adjusting for In-Kind Contributions
Even the $306.12 million inflow figure requires clarification. In September, DCG International Investments, Grayscale's parent company, acquired approximately $100 million of ZCSH shares in exchange for 85,705 ZEC tokens, according to a Form 8-K filing. Excluding this in-kind swap, fresh outside investor cash totaled roughly $200 million of the $1 billion total.
Recent Investor Interest
Despite the composition of the milestone, new capital continues to enter the fund. One trading session in the previous week brought $46.6 million in inflows. The growing interest in Zcash coincided with 21shares listing Europe's first Zcash exchange-traded product as the token's price broke $1,600.
Upcoming Stock Split
Grayscale announced a 3-for-1 forward split for ZCSH shareholders. The split applies to holders of record at the close on September 28 and takes effect before the market opens on September 30. The net asset value per share will drop to approximately one-third of its current level, with three times as many shares outstanding. The total dollar value of each shareholder's holdings will remain unchanged.
