What Justifies ZEC's Repricing in the Market: From Marginal Asset to Privacy Hedge Tool

In recent months, the crypto market has exhibited an interesting phenomenon: while Bitcoin repeatedly adjusts from high levels and market expectations are constantly shifting, the leading asset in the privacy sector, Zcash (ZEC), has demonstrated independent market vitality.

Latest data shows that ZEC is currently priced at $402.55, with a 24-hour increase of 6.21%, and a circulating market cap of $664 million. This asset, which was once listed as a candidate for delisting on multiple exchanges, why did it experience its own breakout in late 2025? What market signals does this behind-the-scenes movement reflect?

The Market is Reinterpreting the Monetary Significance of “Privacy”

For a long time, the market has regarded ZEC as a niche privacy tool rather than a true monetary asset. But this perception is undergoing a systemic shift.

The reason lies in the institutionalization process of Bitcoin, which is profoundly changing the status of privacy within the cryptocurrency ecosystem. When the recognition of monetary attributes among assets outside of BTC and ETH undergoes the most significant transformation, ZEC has become the focus of market reevaluation — no longer seen as a geek’s preference, but as a hedge for core monetary properties.

This shift is backed by logical reasoning: Bitcoin has proven the feasibility of non-sovereign digital currencies on a global scale, but it has a fatal design flaw — a fully transparent ledger. Every transaction is broadcast to the public network, allowing anyone to trace and analyze through block explorers.

Ironically, a tool originally intended to weaken state control has instead built a financial “panoramic prison.” In contrast, Zcash, through zero-knowledge cryptography, combines Bitcoin’s monetary policy with the privacy attributes of physical cash. In the current digital asset system, no other asset offers the long-term tested, deterministic privacy guarantees that the latest Zcash privacy pools do.

This leads the market to reposition ZEC as: a hedge against the rise of surveillance states and the institutionalization of Bitcoin.

Why Bitcoin Cannot Evolve by Itself

Some argue that Bitcoin will eventually absorb Zcash’s privacy features, but this hypothesis overlooks a key technical reality.

The Bitcoin community is known for its conservatism, prioritizing mechanism stability to maintain system integrity. Embedding privacy features at the protocol level would require modifying Bitcoin’s core architecture, introducing risks of inflation vulnerabilities and directly threatening its most fundamental monetary credibility. For Zcash, such risks are acceptable because privacy itself is its core value proposition.

More importantly, zero-knowledge cryptography significantly reduces blockchain scalability. Preventing double-spending requires the use of invalid signatures and hashed receipts, which can lead to “state bloat” concerns. Invalid signatures are essentially a list that only grows over time, increasing the operational costs for nodes. If nodes are forced to store an ever-expanding set of invalid signatures, Bitcoin’s decentralization could be substantially weakened.

Without a soft fork supporting zero-knowledge verification, no Bitcoin layer-2 solution can inherit BTC’s security while achieving Zcash-level privacy. You either introduce trusted intermediaries, accept long withdrawal delays, or outsource security entirely to independent systems. This is precisely why ZEC, as a privacy-focused cryptocurrency, holds unique value.

Real-World Threats Amplify Privacy Needs

The genuine driver behind privacy demand stems from increasingly evident real-world threats.

Approximately half of the countries worldwide are researching or deploying CBDCs(CBDC). The core feature of CBDCs is “programmability”: issuers can not only track transactions but also directly control how, when, and where funds are used. Funds can be set to only be effective within certain merchants or geographic regions.

This is not science fiction:

In Nigeria in 2020, during protests against police violence, the central bank froze accounts of several organizers, forcing the movement to rely on cryptocurrencies for sustenance;

In the US from 2020 to 2025, regulators and banks de-banked a series of legitimate but politically sensitive industries, including oil and gas, firearms, adult content, and crypto sectors;

In Canada in 2022, during the “Freedom Convoy” protests, the government froze protesters’ accounts, and the Royal Canadian Mounted Police even blacklisted 34 self-custodied wallet addresses, demanding all exchanges cease trading.

In such an era, ZEC offers a clear “exit mechanism.”

“Co-opted” Bitcoin Needs an Insurance Policy

Deeper still, Bitcoin itself is becoming centralized. Currently, about 5.1 million BTC (24% of total supply) are held by centralized exchanges, ETFs, and listed company custodians. This means roughly a quarter of BTC supply could theoretically be confiscated by regulators.

This structure closely resembles the conditions under which the US government seized gold in 1933. Back then, the government issued an executive order forcing citizens to surrender gold reserves and exchange them for fiat at fixed prices. For Bitcoin, the path is identical: regulators do not need your private keys, only jurisdiction over custodians. Once authorities issue enforcement orders, these entities are legally obliged to freeze and transfer the BTC they hold.

Without any code modifications, nearly a quarter of BTC supply could be “nationalized.”

Furthermore, the transparency of blockchain means self-custody is no longer a sufficient defense. Any BTC withdrawn from KYC exchanges leaves a traceable “paper trail.”

By converting to Zcash, holders can sever this custody and regulatory link, achieving true wealth isolation. Once funds enter Zcash’s privacy pools, their ultimate destination becomes a cryptographic “black hole” in observers’ eyes. Regulators can see funds leaving the Bitcoin network but cannot trace their final flow.

Of course, the strength of this anonymity depends entirely on operational security: address reuse, assets obtained through KYC exchanges, all leave permanent links before entering the privacy pools.

Technological Breakthroughs Are Removing the Final Barriers to User Adoption

Demand for privacy coins has always existed, but Zcash has historically struggled to “reach users.” High memory requirements, long proof times, and complex configurations made private transactions slow and daunting for ordinary users.

Recent infrastructure breakthroughs are systematically removing these barriers.

The Sapling upgrade reduced memory requirements by 97% (to about 40MB), and proof times by 81% (to around 7 seconds), enabling mobile privacy transactions.

Subsequent Orchard upgrade, with the introduction of Halo 2, eliminated reliance on trusted setup, and introduced unified addresses, integrating transparent and private addresses into a single interface, greatly reducing user mental load.

These improvements culminated in the release of the Zashi mobile wallet in March 2024. With its unified address abstraction, Zashi simplifies privacy transactions to a few taps, making “privacy” the default experience.

Additionally, integration with NEAR Intents removes the need for complete reliance on centralized exchanges, allowing users to directly swap BTC, ETH, and other assets for privacy ZEC, or even pay any address on 20 chains using privacy ZEC.

Together, these initiatives help Zcash bypass historical friction, access global liquidity, and align with genuine market demand.

The Evolution of ZEC and BTC Relationship

Data shows that since 2019, the rolling correlation coefficient between ZEC and BTC has declined from 0.90 to recent levels of 0.24. Meanwhile, ZEC’s rolling Beta against BTC has risen to a historical high. This divergence clearly indicates that the market is assigning an independent premium to Zcash’s privacy attributes.

This does not mean ZEC will surpass BTC. Bitcoin, with its transparent supply and auditability, has established itself as the most reliable cryptocurrency; Zcash, as a privacy coin, still inevitably bears the trade-off between privacy and auditability.

But ZEC can fully carve out its own position without replacing BTC. They are not solving the same problem but playing different roles in the crypto ecosystem:

BTC is a “robust cryptocurrency” optimized for transparency and security, while ZEC is a “privacy-focused cryptocurrency” born for privacy and confidentiality.

In this sense, ZEC’s success does not depend on beating Bitcoin but on complementing the attributes Bitcoin deliberately abandons. As macro environments increasingly emphasize financial surveillance, this premium on privacy attributes will become even more apparent.