Zcash and NEAR Protocol Rally Amid Altcoin Leverage Surge

Altcoin perpetual futures open interest has surpassed Bitcoin’s for the first time since December 2024, signaling a shift in market positioning as Zcash (ZEC) and NEAR Protocol (NEAR) lead a speculative rally [1, 2]. This surge in leverage, which echoes conditions preceding a market-wide liquidation in October 2025, leaves smaller tokens vulnerable to sharp reversals if the current momentum stalls [1].

Leverage and market rotation

The recent price action in Zcash and NEAR is occurring as traders rotate capital away from Ethereum and into smaller assets [2]. Zcash’s derivatives book reached an all-time high of approximately $2.4 billion during its recent rally, a move that forced the closure of roughly $34 million in short positions [1]. This activity coincides with Grayscale’s filing to convert its ZEC trust into a spot ETF, providing a fundamental narrative for the price increase even as leverage builds [1].

NEAR Protocol has tracked this trend closely, surging more than 10% on Sunday [2]. Analysts have noted a near 1:1 correlation between NEAR and ZEC, suggesting that the two assets are moving in lockstep as part of a broader trend of traders seeking to outperform Bitcoin and Ethereum [2]. However, with ZEC trading at more than 2.5 times its 200-day moving average and an RSI of 82.18, the asset is currently in overbought territory, increasing the risk of a technical correction [2].

The risk of a liquidity trap

While Bitcoin’s current advance is supported by spot demand and rising call-option skew, the buildup in altcoin leverage remains a point of concern for market observers [1]. Neoclassic Capital’s Michael Bucella described the current environment as a "healthy rotation" for Bitcoin, but warned that the high levels of altcoin open interest mirror the conditions seen in October 2025, which preceded a significant market-wide liquidation [1].

The rotation into smaller tokens like NEAR and ZEC represents a move further down the risk stack as Bitcoin’s rally matures [1]. Because these tokens are currently driven by high leverage rather than the spot-backed demand supporting Bitcoin, any cooling in market sentiment could lead to rapid deleveraging across the altcoin sector [1, 2].

What to watch

• Liquidation triggers: Monitor whether the current altcoin open interest unwinds in an orderly fashion or triggers a cascade of forced liquidations similar to the October 2025 event [1].
• Correlation shifts: Watch for a decoupling between ZEC and NEAR; if the 1:1 correlation breaks, it may signal a shift in the speculative appetite that has driven the recent gains [2].
• ETF developments: Track updates regarding the Grayscale ZEC trust conversion, as this remains a primary fundamental catalyst for institutional interest in the privacy coin [1].

The central question for the remainder of September is whether the current altcoin rally can sustain its momentum as leverage levels reach historical extremes. With Bitcoin’s own rally anchored in spot demand, the divergence between the two asset classes suggests that the market’s next move will depend heavily on whether speculative positions are liquidated or rolled over [1].