Reversal in AI investment and Zcash vulnerability strike cryptocurrency markets The cryptocurrency market rapidly lost value amid recent risk-off sentiment, with major assets, led by Bitcoin and Ethereum, posting significant weekly declines. Market participants point to a retreat in AI-related outlooks by major semiconductor firms, which weighed on equities and triggered capital outflows from cryptocurrencies. As a result, Bitcoin dropped to near key support levels, marking its most severe price movement since July 2024. ([https://t.co/QL061oJyyr](https://t.co/dxTdq5PTSb)) Another trigger for market pressure was a critical vulnerability discovered in the privacy coin Zcash (ZEC). Researchers identified a flaw in the "Orchard" shielded pool, which theoretically could allow spoofing of supply, prompting the project to deploy an emergency patch. The inability of third parties to fully verify whether actual fraudulent minting occurred—due to the design’s inherent privacy features—amplified investor anxiety, causing ZEC to plummet sharply in a short period. ([https://t.co/Va84G2Hlol](https://t.co/T1x87P1ktC)) During the sharp decline, massive leveraged liquidations occurred. Reports indicate that billions of dollars in long positions, primarily in Bitcoin and Ethereum, were liquidated within a short timeframe, further deteriorating market liquidity. This chain reaction of position liquidations exacerbated downward price momentum. ([https://t.co/QL061oJyyr](https://t.co/2bD7CSwtiK)) Institutional investment flows also weighed on the market. Observations include sell-offs by a major asset manager and sustained outflows from spot ETFs, leading to concerns that the market needs "new buyers." Analysts note that market participants are increasingly holding back from cryptocurrencies amid high interest rates and a temporary pullback in equity markets driven by AI-themed stocks. ([https://t.co/Va84G2Hlol](https://t.co/Z4K9bH6n9q)) In response to the incident, Zcash is now engaging in discussions to reassess its network design. The developer community has begun exploring the adoption of "turnstile accounting" to enhance transparency in shielded pools and evaluating new pool architectures. While immediate technical fixes are underway, institutional measures aimed at restoring trust are becoming the focal point. Meanwhile, the project team has stated that no evidence of actual exploitation has been confirmed to date. The market remains unstable, with recovery of liquidity and confidence emerging as key areas of focus going forward. ([https://t.co/pogAHcsLvE](https://t.co/LxYgkFajmk))