The resurgence of privacy coins is one of the most unexpected phenomena in this year's cryptocurrency market. Represented by ZEC, which has surged over 700% this year, the entire privacy asset sector has seen a short-term increase of about 80%. Once regarded as a "regulatory gray area," privacy coins are now being redefined as "structural assets"—they serve as a buffer zone between compliance and decentralization, as well as a new outlet for capital seeking defensive allocations.
This round of price increases is not coincidental but rather the result of three overlapping forces. First, the tightening of the regulatory environment has created "anonymity scarcity": against the backdrop of the EU's proposed ban on privacy coins and the strengthening of the U.S. anti-money laundering framework, anonymous trading channels have become a "safe haven" in the market. Data shows that the balance of ZEC's shielded pool has increased by 25% in a month, with the proportion of privacy transactions rising to 30%. Second, the return of institutional funds has reshaped valuation anchors: Grayscale has restarted its ZEC trust, with assets under management increasing by 228% in a single month, locking in about 2% of the circulating supply. Finally, technological innovations have provided a new narrative: projects like ZKsync, Secret, and Horizen are advancing privacy from "tool attributes" to "infrastructure" through zero-knowledge proofs and Layer 2 technology.
This means that the rise of privacy coins is no longer just a short-term trend but resembles a reassessment of the asset pricing system. From the margins to the mainstream, from narrative to structure, they are being included in the scope of "configurable assets."
In recent years, "privacy" has been increasingly marginalized in the crypto world: transparency has been seen as a symbol of compliance, while privacy has become synonymous with risk. However, regulatory pressure has inversely shaped the market's demand for hedging. When every transaction on mainstream chains can be traced, the "untraceability" of privacy assets has become a truly scarce resource. Data indicates that the proportion of ZEC shielded transactions has increased from 10% to 30%, with capital inflows showing structural acceleration.
At the same time, institutional attitudes are beginning to shift. From Grayscale restarting its ZEC trust to some quantitative funds and market makers rebuilding positions, the possibility of privacy coins being included in "compliant fund portfolios" is emerging for the first time. This indicates that the market is transitioning from "avoiding regulation" to "holding anonymity in a compliant manner," moving from risk-averse sentiment to asset allocation logic.
The third driving force comes from technological expansion. The ZKsync Atlas upgrade has increased throughput to 30,000 TPS, with transaction fees dropping to $0.0001; protocols like Secret, DASH, and Horizen have made breakthroughs in cross-chain anonymity and application-layer privacy computing. Privacy assets are beginning to move out of the "defensive" narrative and into the stage of "functional infrastructure."
In other words, this is not just a surge of a particular coin, but an industry-level "correction" of the entire privacy system. The market is reassessing the value foundation of privacy assets, leaving structural space for a new cycle.
With the explosion of ZEC, the narrative of "Bitcoin Silver" has been raised again. ZEC is seen as a parallel system to BTC: PoW consensus, a cap of 21 million, and stronger anonymity have led the market to reassign it a store of value function. However, while this analogy is vivid, it fails to capture the true transformation of privacy assets.
The rise of ZEC is not simply an "alternative narrative," but an evolution of institutional asset logic. On one hand, the entry of institutions and fund trusts has placed it within a "regulated understanding range"; on the other hand, the combination of privacy technology with Layer 2 and AI computing scenarios has made "anonymity + computation + settlement" a new growth model. Privacy is no longer a narrative of "confronting regulation," but rather a redefinition of new boundaries within the rules.
The sustainability of privacy coins in the future depends on three questions: Can the funds in the shielded pool continue to grow? Can institutions secure stable compliant channels? Can the ecosystem expand to real application scenarios? If the answers are affirmative, privacy assets may welcome a new institutional turning point; otherwise, they may still fall into cyclical repetition.
The revival of privacy assets actually reflects a deeper change in the entire cryptocurrency market: moving from "making money through narratives" to "surviving through structure." As Bitcoin spot ETFs drive institutional capital into the market, capital is re-evaluating the importance of "certainty" and "verifiability."
Privacy coins sit right between the two—hedging against the risks of regulatory transparency while serving as an experimental ground for decentralized systems. The future winners may not be the projects with the loudest narratives, but those that find structural balance between transparency and privacy.
As capital begins to replace "emotional drivers" with "structural security," privacy assets may no longer be a safe haven but rather the starting point of a new cycle.
Related: Arthur Hayes claims Zcash (ZEC) has become the second-largest holding of his family office, next to Bitcoin (BTC).
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