Key takeaways
- On June 5, ETH plunged 10% to $1,545, leading to a market-wide sell-off that wiped out $468 million in leverage.
- ZEC crashed more than 40% after an AI tool discovered a security flaw, ceding its top privacy spot to Monero.
- Fhenix founder Guy Zyskind expects the ZEC exploit to shift the industry’s focus to FHE privacy technology.
The market bloodbath drags on Altcoin Ceiling below $1 trillion
The chaos that characterized cryptocurrency the market on Friday saw several large-cap companies altcoins record double-digit losses, resulting in an overall market capitalization of altcoins falling well below the $1 trillion mark. Ethereum ( ETH) directed altcoins falling after plunging 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 24 hours dragged its market capitalization below $200 billion.
At the time of writing (2:45 p.m. EST), ETHSeven-day losses stood at nearly 22%, while its year-to-date gains approached 50%. The price performance of the second-largest digital asset saw over $468 million in leveraged positions wiped out, with long bets accounting for 87%, or $408 million, of the total. ETHThe drop in recent weeks has left Bitmine, Ethereum’s main treasury company, with an unrealized loss of $10.3 billion.
Other large-cap companies altcoins as BNB, XRPAnd GROUND also saw red, but their losses were all less than 10%. This was the case for several others altcoins Also.
However, unlike recent days, where a few tokens appeared trend against the marketTHE cryptocurrency The massive market sell-off on June 5 saw almost all altcoins record losses. HYPE, which hit a new all-time high of $75.48 on June 2, fell 14% to $57.12. Meanwhile, LAB, which also hit a new high of $27.30 on June 2 in a falling market, fell 23% in 24 hours but rose 89% over seven days.
ZEC was perhaps the biggest loser among recent high-flying tokens, falling from just under $540 to an intraday low of $264.80, a drop of more than 40% in 24 hours. However, unlike its peers, ZEC’s slide was linked to the revelation of a vulnerability in Orchard’s protected pool, present since 2022. According to security expert Taylor Hornby, the vulnerability allowed the counterfeiting of ZEC tokens.
Although ZODL quickly deployed an emergency soft fork to patch the exploit, the revelation that a critical vulnerability had been hidden for four years undetected, only to be discovered by AI tools, sent shockwaves through the community. The news sparked a wave of market panic, prompting high-profile figures like Arthur Hayes, co-founder of BitMEX and long one of ZEC’s most vocal cheerleaders, to liquidate its position.
The Privacy Debate: ZK-Proofs vs. FHE
Some observers have argued that the incident demonstrated the limits of zero-knowledge (ZK) proofs that anchor the Zcash protocol. Guy Zyskind, a blockchain privacy pioneer and founder of Fhenix, says this revelation should highlight the benefits of alternative encryption technologies such as fully homomorphic encryption (FHE).
“One of the nice properties of FHE compared to Zcash/ZK is that you can actually calculate in the encrypted domain. This means that you can, in theory, encrypt the sum total of everyone’s coin balances and make sure that it doesn’t increase or inflate due to a bug in the software. With ZK, you either reveal it to everyone or hide it. Zcash chose the latter for more privacy at the expense of users who cannot have confidence that total supply remains healthy,” Zyskind said.
While ZEC later rebounded to trade around $320, the coin’s dramatic fall reduced its market capitalization from around $9 billion to $5.37 billion. In doing so, he gave up his number one position privacy coin in Monero.
Meanwhile, at the time of writing this article, the altcoin market capitalization had fallen to $880 billion and appeared on track to reach levels last seen in early February.
