Under the dual pressure of tightening global regulations and a general market downturn, privacy coins have surprisingly surged, becoming the brightest stars in the dim cryptocurrency market. In the past week, the overall cryptocurrency market declined, with the total market capitalization dropping 3.7% from $3.96 trillion to $3.81 trillion.
However, amidst this gloom, privacy-focused cryptocurrencies have soared against the trend, with their market capitalization briefly surpassing $24 billion, rising approximately 80%. Among the privacy coin camp, DASH and ZEC have performed particularly well, recording increases of 65% and 9.55% respectively, with DASH's seven-day increase reaching as high as 68%.
1. Rising Against the Trend: Market Performance of Privacy Coins
While the overall cryptocurrency market is declining, privacy coins have emerged with an independent rally.
● The market capitalization of privacy coins surged approximately 80% in the past week, briefly surpassing $24 billion in the morning. This counter-trend rise highlights the rapid growth in investor demand for financial privacy.
● DASH has been the standout performer among privacy coins, with a staggering increase of 68% in the past week, approaching $150 at one point.
● Meanwhile, Zcash has also shown strength, with its price soaring to $388 last Friday, setting a new historical high of over eight years, briefly surpassing Monero to become the highest market cap privacy coin.
2. Driving Factors: The Forces Behind the Surge of Privacy Coins
Regulatory Anxiety Drives Demand
In the context of tightening global regulations, the value of privacy coins has become prominent. Cryptocurrencies are under increasingly strict scrutiny, including KYC checks, exchange monitoring, and blockchain analysis technologies.
● The EU has enacted new regulations effective December 30, 2024, requiring exchanges to treat transfers from self-custody wallets as high-risk transactions. The U.S. Treasury is also seeking public input on "privacy-enhancing tools" in August 2025 to inform new guidelines.
● These regulatory measures have prompted investors to refocus on privacy solutions. Nansen senior research analyst Jake Kennis noted: “Privacy is increasingly seen as a necessity rather than just a feature.”
Technological Upgrades Enhance Usability
● Zcash's technological upgrades have significantly improved user experience. Its new Zashi wallet feature allows users to perform cross-chain exchanges and private payments through integration with Near's Intents system. This means users can easily transfer funds between Zcash's privacy layers without going through centralized exchanges or complex bridging interfaces.
● As a result, Zcash's shielded pool has expanded, currently nearing a historical high of 4.9 million ZEC.
Halving Expectations and Institutional Entry
● Zcash is set to undergo a halving in November 2025, reducing the block reward from 3.125 coins to 1.5625 coins. Coinbase's head of investment research David Duong stated that this move is expected to reduce supply by about 1,500 coins per day, and the market has begun to react to this.
● At the same time, institutional investors are quietly positioning themselves. Grayscale's Zcash Trust holds over $85 million in assets, indicating a growing interest from traditional capital in privacy coins.
3. Key Players: Analysis of the Three Major Privacy Coins
Zcash: The Token of Selective Privacy
Zcash is one of the early cryptocurrencies focused on privacy, launched in October 2016.
● It uses zk-SNARKs technology, allowing users to choose between transparent addresses or shielded addresses, maintaining transaction privacy when needed or providing transparency when necessary.
● This flexibility gives it an advantage in compliance, and Zcash's developer, Electric Coin Company, has been committed to improving user experience, driving exponential growth in shielded transactions.
Dash: The Revival of a Veteran Privacy Coin
Dash was born in 2014 and is a veteran cryptocurrency in the privacy sector. It employs the PrivateSend mixing protocol to achieve transaction anonymization through a "fund splitting-mixing-recombination" process.
● Dash's core positioning is "decentralized digital cash," aiming to address the dual pain points of traditional cryptocurrencies in privacy protection and practical payment scenarios.
● Analysts attribute Dash's revival to network development initiatives like the "Three Billion Project," which aims to promote Dash's widespread adoption in underserved markets.
4. Market Sustainability Analysis
Short-term Momentum and Long-term Value
● In the short term, the rise of privacy coins is driven by various factors. BitMEX co-founder Arthur Hayes' bullish prediction for Zcash sparked market enthusiasm. After he recently predicted that Zcash's price would reach $10,000, Zcash's price quickly surged from $272 to a peak of $355 within hours.
● However, in the long term, the real application scenarios and policy directions will be the key factors determining the market for privacy coins.
Regulatory Uncertainty
● The biggest challenge facing privacy coins comes from regulatory aspects. The EU's Anti-Money Laundering Regulation (AMLR) will restrict licensed exchanges from dealing with privacy coins before July 2027. This could lead to privacy coins being delisted from major exchanges, affecting their liquidity, but it may also drive users towards decentralized exchanges and self-custody.
Technological Innovation as a Driver
● Privacy technology itself is also continuously evolving. Zcash is undergoing a Crosslink upgrade, which will introduce a proof-of-stake layer based on proof-of-work consensus. Meanwhile, the Tachyon project aims to significantly enhance the scalability of Zcash's shielded protocol, achieving "planetary-level" private payments.
The rise of privacy coins is not coincidental. In an era of increasing digital surveillance, financial privacy has become a scarce resource. The future path of privacy coins will not be smooth, but with technological advancements and deeper market education, they are likely to occupy a more solid position in the cryptocurrency ecosystem.
The balance between privacy and transparency will be an eternal theme of the digital age.
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