Traders and speculators shifted capital toward Monero (XMR) following a sudden governance rupture at Zcash, which culminated in the Electric Coin Company (ECC) staff resigning on January 7. Market participants moved to XMR as confidence in Zcash’s roadmap and leadership evaporated.
In late 2025 and into early 2026 a governance dispute between the ECC and the Bootstrap board escalated. The ECC team resigned en masse on January 7, citing what they called “a fundamental misalignment with Bootstrap’s mission and operational impediments,” according to reports. Observers framed the split as a clash over funding priorities, the project’s privacy direction and the mechanics of token-based governance.
The move reflects a risk re-pricing inside the privacy-coin sector: uncertain governance at Zcash drove short-term selling in ZEC and a pronounced uptick in Monero flows and futures activity, according to contemporaneous coverage.
Coverage of the episode highlighted prior warnings about token governance risks and traced the crisis to deep ideological differences over whether Zcash should prioritize default privacy or offer privacy as an option. Those tensions, once public, created immediate doubts about developer continuity and the project’s ability to execute future upgrades.
Market reaction, flows and implications for traders
Zcash suffered sharp declines in the immediate aftermath, with reported drops ranging from roughly 7% to more than 20% in the most acute selling episodes. At the same time Monero posted rallies in the 20%–23% range as traders rotated positions and futures desks chased short squeezes, according to market reports cited in the coverage.
Monero’s privacy-by-default model—built on Ring Signatures, Stealth Addresses and RingCT—offered a clear alternative for privacy-focused traders worried about Zcash’s future. Conversely, some investors continued to hold or trade ZEC for its optional privacy model and exchange liquidity, factors that preserve demand among more compliance-sensitive profiles.
‘The resignation exposed governance as an acute risk for Zcash,’ one summary of the reporting noted, attributing the characterization to the departing developers and subsequent press coverage. The narrative pushed some liquidity from a governance-uncertain asset into a policy-stable peer.
Investors are now watching whether Zcash can present a credible roadmap and restore developer confidence; the market’s next test will be any official response from Bootstrap and subsequent technical or governance announcements, which will determine whether capital that rotated to XMR remains permanent or reverses as clarity returns.
