Author: J.A.E

Recently, with the Grayscale Zcash Trust opening to qualified investors and a highly influential comment from renowned Silicon Valley angel investor Naval Ravikant, the price of the privacy coin Zcash (ZEC) surged over 220% in two weeks, reaching a three-year high. The Ethereum Foundation followed suit, announcing the establishment of a "Privacy Cluster" team, elevating privacy technology to a core strategic position in protocol development.

In the new wave of rising cryptocurrency markets, "privacy" assets are making a strong comeback through a resonance of institutional funds, macro narratives, and infrastructure levels.

Grayscale Effect Fuels Renewed Institutional Interest in Privacy Assets

As a leading asset management institution in the crypto space, Grayscale's movements often serve as a barometer for market sentiment.

On October 1, Grayscale announced that its Grayscale Zcash Trust (ZCSH) is now open for subscription to qualified investors. This move signifies a renewed interest from institutional funds in the privacy asset sector.

Zcash is known for its use of zk-SNARKs zero-knowledge proof technology, allowing users to verify transactions without disclosing private information such as the sender, receiver, or amount. Although privacy coins have always faced regulatory controversies, the opening of the Grayscale Trust provides a regulated channel for qualified investors seeking to allocate privacy assets.

The attraction of regulated capital to privacy assets is expected to further enhance the long-term demand outlook for $ZEC. The influx of institutional funds also provides a more solid structural support for this rebound.

Thus, the opening of the Grayscale Zcash Trust is not only a routine operation of institutional product lines but also a proactive layout of institutional funds regarding the long-term value of "privacy" assets against the backdrop of tightening global regulations and the increasing importance of digital identity and financial privacy.

Naval's "Insurance Theory" Ignites $ZEC Price

In stark contrast to the steady entry of institutional funds is the market's explosive potential activated by endorsements from top KOLs.

On the same day, renowned Silicon Valley angel investor Naval posted a concise yet philosophical statement on the X platform, which quickly spread throughout the community: Bitcoin is insurance against fiat currency, and ZCash is insurance against Bitcoin. Naval's "insurance" theory gives Zcash a new positioning as the "ultimate privacy protection" in the digital financial system.

Although it was just a one-sentence comment, Naval expressed the long-term value of privacy assets in the digital age, emphasizing the growing demand for financial privacy in the overall macro environment. Investors are seeking defensive assets to hedge against risks, making Zcash an ideal choice for this macro hedging narrative.

Additionally, the market's upward momentum is also highly correlated with Zcash's halving cycle, with its third halving scheduled for November 2025. Historical experience shows that halving events are usually priced in by the market in advance. The recent price surge occurring on the eve of the halving is undoubtedly a preemptive market reaction to this deflationary event, further reinforcing the narrative foundation for the rise.

Driven by the triple forces of institutional sentiment, Naval's remarks, and the halving event, the price of $ZEC experienced explosive growth within just one week. As of October 10, the price of $ZEC surged over 220%, reaching a high of $238.41, breaking a multi-year downtrend and once again attracting the attention of global investors and traders.

Ethereum Foundation Establishes "Privacy Cluster" Team

While Zcash makes a strong comeback, the Ethereum Foundation has also made significant strategic adjustments, announcing the establishment of a "Privacy Cluster" team.

This cluster brings together 47 top researchers, engineers, and cryptographers, focusing on developing privacy features at the protocol level and elevating privacy technology to a "top priority" within the Ethereum ecosystem.

The foundation emphasizes that privacy is no longer an abstract academic study but the foundation for building "civilizational infrastructure," which must be "organized, resourced, and deployed at scale." This strategic shift signifies that Ethereum views privacy as a core function of the platform rather than an optional external service.

The foundation has restructured its new privacy strategy into three pillars with practical use cases that can directly meet the needs of users, developers, and institutions: 1) Private Reads: Aiming to achieve anti-surveillance on-chain queries, authentication, and browsing, helping users avoid data leaks caused by on-chain data tracking and access; 2) Private Writes: Focusing on shielding core on-chain operations, including payments, governance, and transfers, similar to Zcash's native shielding function to ensure the confidentiality of operations; 3) Private Proving: Committed to making zero-knowledge proofs more efficient, convenient, and usable, applicable to decentralized identity verification (zkID), data portability, and client proofs in more general scenarios.

It is noteworthy that although the Ethereum ecosystem has widely adopted ZK-Rollups for scaling, many ZK-Rollups primarily provide simplified verification to enhance scalability, rather than protecting users' native privacy. The current privacy strategy may have recognized the limitations of past L2 scaling solutions in terms of native privacy and plans to fundamentally address users' data confidentiality issues through optimizations at the protocol and application levels. The foundation also specifically points out that privacy features are necessary for institutions to comply with data protection standards, suggesting that its new strategy will balance high practicality with compliance requirements.

Kohaku Wallet Roadmap and Railgun's ZK Collaboration

As the Ethereum Foundation restructures its privacy strategy, its product roadmap aimed at users and developers has also come to light. The Kohaku wallet project is one of the core outcomes of the "Privacy Cluster," dedicated to enhancing the privacy and security of Ethereum wallets.

The Kohaku roadmap proposes a series of features to reduce centralized risks: 1) P2P Transaction Broadcasting: Allowing users to send transactions directly through a peer-to-peer network, bypassing centralized RPC nodes that may leak data; 2) Local Data Verification: In the first phase, the Kohaku browser extension will integrate the Helios client, enabling users to locally verify blockchain data without trusting the validity of external RPC providers; 3) Account Abstraction: Achieving privacy protection supported by native protocols, utilizing the client's zero-knowledge proof system (such as ZK-EVM) to verify wallet control.

The Kohaku project is not developed in isolation but is co-built in collaboration with well-known teams in the ecosystem, such as Ambire, DeFi Wonderland, Helios, and Railgun. Among them, the deep integration with Railgun is crucial.

Railgun is a privacy protocol based on zero-knowledge proofs that allows users to transfer funds without exposing transaction details. By integrating Railgun, Kohaku will enable ZK-driven privacy features, such as private sending and receiving. This move has garnered support from Ethereum founder Vitalik Buterin, who has repeatedly emphasized the importance of ZK-based privacy in protecting user data. The increase in Railgun's usage also indirectly confirms the growing market demand for transaction privacy.

Additionally, driven by the favorable integration with Ethereum, the Railgun protocol token $RAIL has seen a single-day increase of over 80%.

The combination of Grayscale's institutional capital, Naval's theoretical endorsement, and the Ethereum Foundation's long-term strategy forms the strongest "privacy narrative" trinity in the crypto market. As zero-knowledge proof technology continues to mature and application scenarios gradually materialize, the market's emphasis on privacy and digital sovereignty will deepen, and the privacy revolution in the crypto industry has only just begun.

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