Zcash ETF ZCSH climbs as ZEC rally pushes fund toward $1 billion

The Grayscale Zcash ETF (ZCSH) is extending its strong run as Zcash (ZEC) trades around $1,500 and institutional demand pushes the fund closer to $1 billion in assets.

ZCSH closed at $117.72 on September 18, while premarket data on September 21 showed the ETF trading above $122.

ZEC, meanwhile, has climbed more than 200% from its June lows and recently reached around $1,595, according to market data.

ZCSH approaches $1 billion in assets

ZCSH has grown rapidly since launching on NYSE Arca on August 25.

The fund held around $890 million in net assets as of September 17, $914.53 million by September 19. The Block reported more than $233 million in cumulative net inflows since launch.

Trading activity has also been substantial. ZCSH had generated more than $11 billion in cumulative trading volume by September 17, according to The Block.

The strong inflows have helped make ZCSH one of the fastest-growing U.S. crypto ETFs since its launch.

Grayscale announces a 3-for-1 ZCSH split

Grayscale announced a 3-for-1 forward split for ZCSH on September 18.

Shareholders recorded as of the market close on September 28 will receive two additional shares for every share they own. The new shares will be distributed after the September 29 close, with split-adjusted trading scheduled to begin on September 30.

The split will not change the total value of an investor's position. Instead, the number of shares will triple while the NAV per share is expected to fall to roughly one-third of its pre-split level.

The move comes after ZCSH's share price climbed sharply alongside ZEC, potentially making the lower post-split price more accessible to investors.

ZEC rally drives demand for the ETF

ZCSH's growth comes as ZEC has become one of the strongest performers in the crypto market.

Zcash recently moved above $1,500, while futures open interest reached roughly $3.5 billion. Rising open interest alongside the price rally shows that derivatives activity has also expanded, although it does not indicate whether traders are positioned entirely bullish or bearish.

That leverage has already played a role in the rally. Earlier this month, ZEC recorded roughly $34 million in short liquidations as the token moved above $1,000.

Related: Zcash shorts reached 72% as ZEC held above $1,100

Institutional interest keeps building

The ETF has also attracted direct institutional exposure.

On September 8, Digital Currency Group acquired approximately $100 million worth of ZCSH shares through an authorized participant in exchange for 85,705 ZEC.

This came shortly after ZCSH crossed $500 million in assets, showing how quickly institutional exposure has expanded since its August launch.

Related: Ether and XRP ETFs lose money as Bitcoin reclaims $77K

ZCSH carries a 2.5% management fee

Despite the rapid growth, ZCSH comes with a relatively high management fee.

Grayscale lists a 2.50% management fee for the fund. ZCSH provides exposure to ZEC through a traditional brokerage account without requiring investors to directly buy or store the cryptocurrency.

The fee is therefore an important difference between holding ZCSH and holding ZEC directly.

For now, the key development is the speed at which regulated exposure to Zcash has grown. With ZCSH approaching $1 billion in assets and a 3-for-1 split scheduled for September 30, the ETF has quickly become an important part of Zcash's latest market cycle.