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Moutai Moment: When Liquidity Dries Up, Everyone is Hyped about and Holds ZEC

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The endgame of a pump group is either a rising tide that lifts all boats, allowing everyone to profit together, or a stampede-like mass exit, where the last one in takes away all the chips.

Original Title: "Moutai Moment: When Liquidity Dries Up, Everyone Clusters Around HYPE and ZEC"
Original Source: DeepTech TechFlow

David Hoffman tweeted in the early hours of May 21, 2026.

It was just one sentence: "Has the atmosphere of Crypto Twitter truly changed over the past two weeks, or did I just sell my last bit of ETH?"

David Hoffman is the co-founder of Bankless and has been one of Ethereum's most prominent public evangelists for the past six years. He once wrote on his personal page, "99% of wealth is not in banks, but on Ethereum." This individual authored "Ether: The Triple Point Asset," one of the core missionaries defining ETH as a "sound money" narrative.

And now he has liquidated his holdings.

If, at one point last year, some viewed ETH as the "bonds of the future" and SOL as the "NASDAQ on steroids," by May 2026, the market had democratically voted to completely shake off these beliefs. ETH is currently struggling around $2,100, a far cry from its peak of $4,946 in August 2025.

Meanwhile, in the same market, HYPE is just a step away from its all-time high of $59.39, having risen 15% in the past seven days; ZEC has more than doubled in the last month, with a year-to-date increase of over 1400%, propelling its market cap into the top 20.

One market, two kinds of weather.

The Once Baijiu (Chinese Liquor)

This is not the first time such a split has emerged in the crypto world. However, you need to momentarily shift your focus away from the screen and go back to China's A-share market in 2020.

From the second half of 2020 to early 2021, A-share liquidity peaked and then receded. Mutual funds were forced to make a choice: either evenly spread their positions across over 3,000 stocks and accept mediocre beta returns, or concentrate their ammunition on a few core assets that could clearly explain future cash flows. Everyone ultimately chose the latter. The result was that Moutai and Wuliangye were skyrocketed, while the remaining stocks were thrown into a "garbage time" scenario by the market.

During that year, there was a very precise term called "core asset clustering." Its essence was not collusion among fund managers but rather an inevitable reaction in a liquidity-constrained environment, where, as the water in the pond diminishes, all fish swim towards the deepest corner.

The crypto market is now heading towards that darkest corner.

What has happened in the past year? The Bitcoin ETF sucked in around $700 billion of funds for 2024-2025, turning Bitcoin into a "Wall Street-priced asset," but this also meant that Bitcoin's marginal buying pressure began to be restrained by macro interest rates and stock market risk appetite. Q1 2026 inflation data exceeded expectations, coupled with a $1 billion net outflow from the ETF in a single week, causing the entire market to shake.

Even more damning is the narrative collapse. Citi slashed its 12-month target price for ETH from $4304 to $3175 at the beginning of 2026, citing "legislative stagnation in market structure and weakening on-chain activity"; JPMorgan was more blunt in its report on May 19, stating that "ETH needs stronger network growth and DeFi adoption to reverse its relative underperformance compared to Bitcoin."

Short-selling research firm Culper Research even openly shorted ETH, releasing a short report pointing out that the Fusaka upgrade weakened the burning mechanism of EIP-1559, causing ETH to no longer possess its previous deflationary properties.

Solana, on the other hand, has fallen into another dilemma. It is still the chain of DePIN, Meme coins, and the best on-chain transaction experience, but when the market enters a risk-off period, its largest asset to date, "high β," has become a liability instead.

Multicoin's Tushar Jain, the man who once rescued Solana from ruins, publicly announced at Consensus Miami in May that Multicoin had heavily invested in Zcash.

This is a pivotal moment, Solana's earliest and biggest backer starting to shift belief to another chain.

Flocking to HYPE and ZEC

So where did the funds go?

Surprisingly, the answer is consistent: HYPE and ZEC.

The story of Hyperliquid actually began to take shape from a perfect airdrop in November 2024. This team led by Harvard alumni Jeff and Iliensinc, with members from Caltech/MIT/Citadel/Hudson River Trading, did something in the crypto circle that almost no one had done in the past decade, distributing 76% of the tokens to users, without any VC shares.

If you only see this, you only see its "morality tale." What truly drove HYPE's contrarian surge during the 2026 liquidity drought was its "cash flow story."

Hyperliquid is not a token in the traditional sense of a "narrative token."

It is a complete chain, more accurately described as an on-chain ATM in high gear: as the largest decentralized perpetual contract trading platform today, it generates over $1.2 billion in protocol revenue annually; it has entered into an agreement with Circle for a 90% profit share of USDC reserve earnings, contributing $135 million to $160 million in annual cash flow just from this arrangement for token buybacks; this week (May 19), Bitwise announced the addition of HYPE to its balance sheet, along with the launch of an ETF product based on HYPE.

HYPE's open contract volume currently stands at $21 billion, the funding rate has flipped positive, indicating that new long funds are continuing to enter, rather than a false prosperity where shorts are squeezed out.

ZEC's story belongs to a completely different dimension. It is not a "cash flow story," it is a "fear story."

In his latest January Essay, Arthur Hayes wrote bluntly, "This year's dominant narrative is privacy, and ZEC will become the privacy beta. To outperform Bitcoin and Ethereum, I will sell BTC to fund my privacy position." His fund, Maelstrom, has been accumulating since Q3 of 2025.

Then, in early May, Tushar Jain of Multicoin Capital publicly doubled down at Consensus. CoinDesk labeled ZEC as "encryption supremacy" in its March research, indicating that the privacy network has become a form of dominant infrastructure.

The underlying logic chain involves the simultaneous overlay of three things: AI is starting to have the ability to de-anonymize user identities in bulk on transparent chains, the threat of quantum computing is creating long-term uncertainty for existing wallet encryption systems, and quarterly on-chain transaction volume has surpassed $100 billion for the first time, turning "wealth watched by the entire network" into a genuine fear.

The proportion of the ZEC supply locked in shielded addresses has reached 30%, a historical high, indicating that there is quantifiable on-chain evidence of real privacy demand, no longer just a literary narrative. On May 20, the SEC officially closed its investigation into the Zcash Foundation after more than two years and did not offer any enforcement recommendations.

Robinhood has listed ZEC, while Grayscale's ZEC ETF is expected to take the spotlight.

Hayes predicts that ZEC's market cap will eventually reach 10% of Bitcoin's, with the corresponding token price being 15-20 times higher than it is now.

Grouping Dissolution?

In 2021, the liquor stocks in the A-share market saw their group break up after the Chinese New Year. The trigger for the breakup was not a deterioration in fundamentals, but a shift in central bank policy, transitioning the market from a zero-sum game to one of incremental gains. When the pool of water starts to grow, all fish no longer need to crowd into the deepest corner.

When will the pool in the crypto world expand? It depends on when the Fed cuts rates, when ETF funds flow back, when stablecoin market cap hits a new high, and when traditional finance moves more money onto the chain.

However, another possibility that needs attention is that grouping may also self-destruct due to being "held too tightly." The open interest of ZEC futures has surged 40% to $1.3 billion in the past 24 hours, a concentration that is itself a risk signal.

Hayes, Multicoin, retail investors, Robinhood, all squeezed into the same trade, meaning that the exit of any marginal buyer could trigger a cascade of liquidations. The HYPE funding rate has already turned positive and continues to rise, accruing funding costs.

The endgame of grouping is either a rising tide where everyone profits together, or a stampede-like exodus where the last one in takes all the chips.

Which stage are we in now? No one can provide a definite answer. But there is a question that every person reading this article should ask themselves,

If even David Hoffman has sold, do you still have that ETH in your wallet because you believe in it, or because you forgot it was there?

The next question is more practical: when a market is left with only two names to group with, what will be the third name? Aave? Maker? Some undiscovered privacy L2? A high-performance chain that hasn't launched a coin yet?

Those who can clearly answer this question will be the first entrants in the next round of grouping.

Those who can't answer will be the last ones to catch falling knives when the next grouping breaks apart.