Zcash ETF leads $16.8 million altcoin fund outflows, Hedera bucks trend

US-listed altcoin exchange-traded funds saw pronounced outflows on November 5, as investors cut back exposure across several major cryptocurrencies. Data from SoSoValue indicated the broad net withdrawals amounted to approximately $16.8 million, reversing inflows recorded during previous trading sessions.

Zcash sees largest fund withdrawal

The Grayscale Zcash ETF, trading under the ticker ZCSH, accounted for the single largest outflow among altcoin funds. Investors withdrew $10.99 million from the ZCSH ETF, erasing the $3.43 million in inflows from the prior day. The ETF’s net assets now stand at about $724.2 million, with total cumulative net inflows reaching $206.7 million.

This significant move follows a period of volatile investor interest in ZEC-based investment products. An earlier rally in ZEC prices helped propel the fund’s assets closer to the $1 billion mark in previous months.

Institutional investors shifted assets rapidly, as the Grayscale Zcash ETF saw an $11 million outflow that unwound the fund’s previous inflows and left net holdings just above $724 million.

Zcash (ZEC) is a privacy-focused cryptocurrency designed to offer users enhanced transaction confidentiality through zero-knowledge proofs, distinguishing itself from more transparent blockchain networks.

Mini dictionary: Grayscale, a leading digital asset management firm, operates multiple cryptocurrency trust and ETF products, enabling institutional investors to gain exposure to various cryptocurrencies without directly owning the underlying tokens.

Hyperliquid, Solana, Avalanche and NEAR also see outflows

Beyond Zcash, Hyperliquid-related funds faced the second-largest pullback. Bitwise’s BHYP saw $2.19 million withdrawn, while Grayscale’s HYPG experienced about $829,000 in outflows. Combined, Hyperliquid funds posted just over $3 million in withdrawals.

Solana ETFs, which had registered no net flows over the past three sessions, reported $1.18 million in outflows. This renewed selloff followed a recent trend when large investors removed $24.8 million from Solana funds within a single week.

Avalanche-tracking funds lost approximately $841,000, and NEAR-focused ETFs saw $774,000 in net redemptions.

In contrast to these declines, Hedera’s ETF offerings attracted $278,000 in fresh capital. Canary HBAR ETF marked its second consecutive session with positive inflows, bringing total cumulative net inflows to roughly $116.7 million. The fund’s net assets currently stand at $57.5 million, highlighting that institutional appetite varies significantly across altcoin categories.

Mixed impact across the broader crypto ETF market

Several other major altcoin ETFs, including those focused on Dogecoin, Chainlink and Litecoin, recorded no net creations or redemptions during the same period. Meanwhile, XRP-tracking ETFs maintained zero net flows for a third straight trading day, mirroring continued inactivity in the fund segment.

The latest ETF outflows coincided with a broader pullback in the cryptocurrency markets. Bitcoin-based ETFs saw much larger redemptions, losing $430.2 million, while Ethereum funds recorded $99.9 million in withdrawals.

Despite these movements, ETF redemptions do not always have an immediate and proportional effect on spot market prices. The actual impact on the underlying tokens can depend on product structure and the mechanisms of fund creation or redemption.

Asset management firms may use in-kind subscriptions, allowing investors to exchange certain cryptocurrencies for ETF shares, which can soften direct selling pressure on the market.

Grayscale’s in-kind subscription models allow eligible investors to deposit cryptocurrencies directly in exchange for new ETF shares instead of liquidating tokens for cash, impacting how redemptions influence actual market activity.

The outflows also coincided with the NU7 network upgrade on Zcash, which introduced shorter block times but came as ETF demand continued to fluctuate.