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Ethereum Pulls Altcoins Below the $880 Billion Mark as a 22% Weekly Drop Undermines Trader Confidence
Friday’s mass cryptocurrency sell-off pushed the total market capitalisation of altcoins down to $880 billion. Zcash suffered the heaviest damage among major tokens, with its price plunging by more than 40% to $264.80.
Key Takeaways:
- On 5 June, $ETH plunged by 10% to $1,545, triggering a market-wide sell-off that wiped out $468 million in credit-line debt.
- $ZEC collapsed by more than 40% after an artificial intelligence tool discovered a security vulnerability, ceding the top spot among high-privacy coins to Monero.
- Fhenix founder Guy Zyskind expects the $ZEC vulnerability to shift the industry’s focus towards FHE privacy technologies.
Market Bloodbath Pushes Altcoin Capitalisation Below $1 Trillion
The chaos that gripped the cryptocurrency market on Friday led several high-cap altcoins to post double-digit losses, pushing the combined market capitalisation of altcoins well below the $1 trillion mark. Ethereum ($ETH) led the altcoin decline after its price plunged from just over $1,700 to an intraday low of $1,545 — a level last seen in April 2025. The digital asset’s 10% drop in value over 24 hours pushed its market capitalisation below $200 billion.
At the time of writing, 14:45 Eastern Standard Time, $ETH’s seven-day losses stood at nearly 22%, while its gain since the beginning of the year was approaching 50%. The price action of the second-largest digital asset led to more than $468 million being wiped out across leveraged positions, with long positions accounting for 87% of that amount, or $408 million. The decline in $ETH in recent weeks has left leading Ethereum asset management company Bitmine with an unrealised loss of $10.3 billion.
Other high-cap altcoins, such as BNB, XRP and SOL, also ended up in the red, although their losses did not exceed 10%. The same was true for several other altcoins.
However, unlike in recent days, when several tokens appeared to move against the market, almost all altcoins recorded losses during the 5 June cryptocurrency market sell-off. HYPE, which reached a new all-time high of $75.48 on 2 June, plunged by 14% to $57.12. Meanwhile, LAB, which also reached a new high of $27.30 on 2 June amid a falling market, dropped by as much as 23% over 24 hours, but remained up 89% over seven days.
$ZEC was arguably the biggest loser among the recent fast-rising tokens, plunging from just below $540 to an intraday low of $264.80 — a drop of more than 40% in 24 hours. Unlike its peers, however, $ZEC’s decline was linked to the discovery of a vulnerability in the shielded Orchard pool that had existed since 2022. According to security expert Taylor Hornby, the vulnerability made it possible to counterfeit $ZEC tokens.
Zcash chart: markets.bitcoin.com.
Although ZODL quickly deployed an emergency soft fork to address the vulnerability, the news that a critical flaw had gone unnoticed for four years — and had only been discovered with the help of artificial intelligence tools — shocked the community. The news triggered a wave of market panic, prompting well-known figures such as BitMEX co-founder Arthur Hayes, long one of $ZEC’s most vocal supporters, to liquidate his position.
Privacy Debate: ZK Proofs Versus FHE
Some observers suggested that the incident demonstrates the limitations of zero-knowledge proofs (ZK), on which the Zcash protocol is based. Guy Zyskind, a pioneer in blockchain privacy and founder of Fhenix, argues that the discovery should draw attention to the advantages of alternative encryption technologies, such as fully homomorphic encryption (FHE).
“One of the nice properties of FHE compared with Zcash/ZK is that you can actually perform computations in encrypted space. This means that you could, in theory, encrypt the total sum of all users’ coin balances and guarantee that it does not increase or inflate because of some software bug. With ZK, you either reveal this to everyone or hide it. Zcash chose the latter for additional privacy, at the cost of users not being able to be certain that the total supply remains stable,” Zyskind said.
Although $ZEC later recovered and traded at around $320, the coin’s dramatic fall reduced its market capitalisation from roughly $9 billion to $5.37 billion. As a result, it ceded its position as the leading privacy-focused coin to Monero.
Meanwhile, at the time of writing, the market capitalisation of altcoins had fallen to $880 billion and appeared to be on track to reach levels last seen in early February.
See also: "Bitcoin Rebounds Above $61,000 After $1.6 Billion Sell-Off"
