Why ZEC has gone from "wild asset" to a privacy hedge favorite—when Bitcoin is regulated, privacy becomes a necessity

Compilation | Gate.io Content Plaza

As Bitcoin hovers between $80,000 and $90,000, repeatedly testing these levels, market focus remains on BTC itself. Few notice that the flagship asset in the privacy track, ZEC (Zcash), has quietly begun its own independent market movement.

Latest data shows ZEC is currently priced at $357.59, with a circulating market cap of $590 million. From a longer-term perspective, since the beginning of this year, ZEC’s relative increase against BTC has reached 666%, and its market cap has at one point surpassed XMR to become the highest-valued privacy coin. Ironically, this asset, once voted for delisting by Binance, is now experiencing a breakout in late 2025.

Is this short-term capital release, or is privacy as a monetary attribute being systematically re-evaluated?

The “Panoramic Prison” Dilemma of Bitcoin

Bitcoin has proven that non-sovereign digital currencies can operate globally. But the problem is, it has completely abandoned the privacy attributes that are commonplace with cash.

Every BTC transaction is broadcast to a transparent public ledger, traceable and analyzable via blockchain explorers. This creates a paradox: a tool originally designed to weaken state control inadvertently constructs a financial “panoramic prison.”

Among cryptocurrencies outside BTC and ETH, ZEC’s most significant change in 2025 is a shift in the perception of its monetary properties. Long considered a niche privacy coin rather than a true currency asset, ZEC’s role is being redefined as concerns over financial surveillance intensify, and as Bitcoin accelerates toward institutionalization, privacy is being repositioned as a core monetary attribute.

The Technological Moat of Privacy

Zcash combines Bitcoin’s monetary policy with cash-like privacy through zero-knowledge cryptography. The key point—in the current digital asset ecosystem, no asset offers the long-term proven, deterministic privacy guarantees that Zcash’s privacy pools do.

This makes ZEC a uniquely difficult-to-duplicate “private currency” form. The market views ZEC as an “ideal private encrypted currency” and positions it as a hedge against the rise of surveillance states and the institutionalization of Bitcoin.

It is nearly impossible for Bitcoin to incorporate Zcash-like privacy architecture at the protocol level. Embedding zero-knowledge cryptography into the base layer would require modifying BTC’s core architecture, risking inflation vulnerabilities and threatening its monetary credibility. It would also significantly reduce scalability—since Nullifiers are essentially an ever-growing list, over time, node resource costs could skyrocket, weakening Bitcoin’s decentralization.

Without support for ZK-verified soft forks, 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 to independent systems.

This is the fundamental reason why ZEC holds unique value as a privacy-focused cryptocurrency.

“Escape Route” in the CBDC Era

The urgency of privacy needs has been amplified amid the rollout of central bank digital currencies (CBDCs). About half of the world’s countries are researching or launching CBDCs.

The core feature of CBDCs is “programmability”: issuers can not only track every transaction but also directly control how, when, and where funds are used. Funds can even be set to only be valid at specific merchants or within certain geographic areas.

This is not a fantasy; it is already happening:

Nigeria (2020): During protests against police violence, the central bank froze accounts of protest organizers and feminist groups, forcing the movement to rely on cryptocurrencies to sustain operations.

USA (2020-2025): Regulators and large banks, citing “reputational risk,” have systematically de-banked industries that are legal but politically unpopular. The OCC’s 2025 research report documents restrictions on oil and gas, firearms, adult content, and crypto sectors.

Canada (2022): During the “Freedom Convoy” protests, the government invoked the Emergency Act to freeze accounts of protesters and donors. The Royal Canadian Mounted Police even blacklisted 34 self-custodied wallet addresses.

In an era where “money can be programmed to control you,” ZEC offers a clear “exit mechanism.”

The “Insurance Policy” of Bitcoin’s “Co-optation”

Zcash essentially acts as an insurance for maintaining Bitcoin’s vision of financial freedom. Meanwhile, Bitcoin is rapidly centralizing—about 3 million BTC held on centralized exchanges, approximately 1.3 million in ETFs, and about 829,000 held by listed companies. In total, roughly 5.1 million BTC (24% of total supply) are controlled by third-party custodians.

This means that roughly a quarter of BTC supply could, in theory, be confiscated through regulation.

This scenario closely resembles the conditions of the U.S. gold confiscation in 1933. Back then, the U.S. government, via Executive Order 6102, forced citizens to surrender gold holdings over $100 and exchanged them for paper currency at a fixed rate. The process was non-violent, carried out through the banking system.

Bitcoin’s path is identical. Regulators do not need your private keys; they only need jurisdiction over custodians. Once governments issue enforcement orders to firms like BlackRock, Coinbase, etc., these companies are legally obliged to freeze and transfer the BTC they hold.

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

Furthermore, blockchain transparency means self-custody is no longer a sufficient defense. Any BTC withdrawn from KYC exchanges will ultimately leave traceable “paper trails.”

BTC holders can convert to Zcash, severing the link between custody and regulation, achieving a form of wealth “air gap.” Once funds enter Zcash’s privacy pools, their destination becomes a cryptographic “black hole” for observers. Regulators can see funds leaving the Bitcoin network but cannot determine their final destination.

Of course, this level of anonymity depends entirely on operational security—address reuse and acquiring assets through KYC exchanges will leave permanent links before entering privacy pools.

Infrastructure Breakthroughs from “Unusable” to “Usable”

Privacy needs have always existed, but Zcash has historically been difficult to “bring to users.” High memory requirements, long proof times, and complex desktop setups made privacy transactions slow and daunting for ordinary users.

Recent infrastructure breakthroughs have systematically removed these barriers.

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

The Orchard upgrade introduced Halo 2, eliminating the need for trusted setup, and introduced unified addresses that combine transparent and shielded addresses into a single entry point, greatly reducing user mental load.

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

Once UX issues are addressed, distribution becomes the final hurdle. Integration with NEAR Intents removes 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.

Two Currencies, Each Its Own Role

Since 2019, the rolling correlation coefficient between ZEC and BTC has been steadily declining from 0.90 to recent levels of 0.24; meanwhile, ZEC’s rolling Beta against BTC has risen to a historical high. This divergence indicates that the market is assigning an independent premium to Zcash’s privacy attributes.

We do not believe 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 carve out its own position without replacing BTC. They are not solving the same problem but playing different roles within the crypto ecosystem:

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

In this sense, ZEC’s success does not depend on beating Bitcoin but on complementing the attributes that Bitcoin deliberately abandons.

As financial surveillance becomes normalized, privacy is no longer optional but a necessity. The re-evaluation of ZEC may well be the market’s rational pricing of this reality.