Grayscale's Zcash ETF, ZCSH, recorded $93.56 million in net outflows over a single week, its worst showing since the product began trading and a sharp reversal for a fund that attracted $271 million in cumulative net inflows within weeks of listing.

ZCSH debuted on NYSE Arca on August 25, 2026, after Grayscale converted its existing Grayscale Zcash Trust into an ETF. The conversion made ZCSH the first US-listed spot exchange-traded fund offering direct exposure to ZEC tokens. Unlike a futures-based product, the fund holds actual ZEC on behalf of shareholders, which means creation and redemption flows translate directly into token purchases or sales.

The launch was strong. Cumulative net inflows reached $271 million by mid-September, and the best single week, ending September 18, 2026, brought in $98.2 million in fresh capital. During that stretch, ZCSH accounted for as much as 32.5% of all spot crypto ETF turnover, according to trading data, and at its peak the fund held roughly 3.5% of the total ZEC supply.

The retreat is visible in the daily redemption figures. On September 30, the fund posted a single-day outflow of $30.25 million. On October 2, another $26.93 million left. Several trading days in late September and early October saw redemptions in the $26–30 million range.

The cumulative effect is material. Net inflows since launch fell from roughly $268 million to $212.56 million over the period. Assets under management peaked between approximately $915 million and $979 million in September, then dropped to around $751 million by early October. The fund remains net positive since launch, but the cushion has thinned considerably.

Grayscale has taken at least one operational step to support trading. On September 18, 2026, the sponsor announced a 3-for-1 forward share split for ZCSH, with a record date of September 28. Shares began trading on a split-adjusted basis on September 30 — the same day the fund recorded its largest single-day redemption of $30.25 million. The split was designed to improve share accessibility and liquidity, though its effect remains unproven in the fund's first weeks of adjusted trading.

ZCSH also carries a 2.5% expense ratio, meaning holders pay that percentage of their investment annually. That fee level is high by broad ETF standards and compounds the pressure on a fund now facing sustained redemptions. Fee revenue scales with assets, so the drawdown from roughly $979 million at peak to $751 million directly reduces Grayscale's take from the product.

The market-structure implications extend beyond the sponsor. A fund that at its height held around 3.5% of ZEC's circulating supply is now a meaningful source of both demand and supply pressure for the token. Inflows require the fund to acquire more ZEC; redemptions force the reverse. That dynamic makes ZCSH's creation and redemption activity a significant variable in ZEC's near-term market behavior. ZEC's price swung widely after the ETF's debut, initially pushing past $1,500 before settling at lower levels, and AUM moves with it.

For the broader crypto ETF market, ZCSH's brief run at 32.5% of spot crypto ETF turnover demonstrated that a product built around a smaller-cap token can capture a disproportionate share of trading activity — at least during the initial listing window. Whether that interest persists past the honeymoon phase is precisely what the current redemption streak is testing.

The picture for Grayscale is mixed rather than grim. The fund still holds around $751 million in assets and remains net positive at $212.56 million in cumulative inflows. But the direction of travel matters: if daily redemptions keep landing in the $26–30 million range, the fund's ZEC holdings — and its fee base — will continue to shrink.

Three variables will define the next phase. First, whether daily redemptions hold in the $26–30 million range or taper. Second, whether ZEC's price stabilizes, since valuation directly supports AUM. Third, whether the 3-for-1 share split delivers the liquidity effects Grayscale intended. The coming weeks of redemption data will show whether the early-October outflows mark the tail end of launch-window repositioning or the start of a sustained drawdown.