ZEC's Remarkable Run: Can Privacy Coins Truly Become the "Silver" of Crypto?

The privacy coin sector has staged a dramatic comeback, with ZEC emerging as the unlikely star of this resurgence. What started as a whisper about digital anonymity has transformed into a roaring market movement, raising a fundamental question: Is this just speculative frenzy, or are we witnessing a genuine shift in how the market values privacy-centric assets?

In late 2024, ZEC experienced an extraordinary rally that sent shockwaves through the crypto market. From around $238 to over $580 within roughly 40 days represented not just impressive returns, but a signal that a forgotten sector was coming back into focus. Over the course of a year, ZEC has surged over 643%, yet at the current price of $344 as of early 2026, the narrative remains contested: Is ZEC destined to become the Bitcoin equivalent in the privacy world, or is it merely riding a temporary wave of regulatory-driven demand?

The Privacy Sector Awakens: ZEC Leads a Broader Rally

ZEC’s dominance in this cycle is unmistakable. The project captured institutional attention when Grayscale reopened its ZEC Trust, offering fee waivers and staking rewards. This wasn’t just a technical listing—it was a signal that institutional money was ready to re-engage with privacy assets after years of regulatory skepticism.

The effect rippled across the entire privacy coin ecosystem. DASH, DCR, ZEN, SCRT, and ROSE all experienced significant moves, with some gaining over 100% during the peak. What’s striking is that this wasn’t merely coordinated hype; there were legitimate catalysts. New perpetual contracts launched on major exchanges, technical upgrades delivered tangible improvements, and most importantly, on-chain activity surged. The shielded transaction volume on ZEC jumped from less than 10% to 25-30% of all transactions—a shift that signals real adoption rather than pure speculation.

ZK (zkSync) presented an interesting case study. Despite being a Layer-2 scaling solution rather than a pure privacy coin, it participated in this rally thanks to its Atlas upgrade, which theoretically increased transaction throughput from 2,000 to 15,000-30,000 TPS and reduced finality time from 3 hours to 1 second. When Vitalik Buterin publicly endorsed ZK as “undervalued” in early November 2024, trading volume surged 30-fold in a single day.

The involvement of high-profile voices—Arthur Hayes calling for a $10,000 ZEC target, Mert’s relentless promotion within the Solana ecosystem, Naval Ravikant reframing privacy as “a fundamental right”—created a narrative that extended far beyond pure technicals. These weren’t random endorsements; they reflected a deeper market sentiment shift.

From Regulatory Pressure to Safe-Haven Play: Why Privacy Matters More Than Ever

The irony is striking: tightening regulations appear to be fueling, not suppressing, the demand for privacy coins. The EU’s proposed 2027 ban on privacy coin trading and the US FinCEN’s increased scrutiny on “high-risk self-custody addresses” created a scarcity premium for privacy assets. As Bitcoin and Ethereum spot ETFs brought these assets under microscopic regulatory examination, privacy became less of a feature and more of a necessity.

This dynamic created what market observers called the “Crypto Anti-Surveillance Wave.” On-chain data supported this narrative. ZEC’s shielded pool balance grew from 4 million to nearly 5 million coins in just 40 days—an increase of over 25%. More significantly, the proportion of fully private transactions jumped dramatically. This wasn’t whale manipulation; this was users actively choosing complete anonymity over compliance-friendly transparency.

The Grayscale factor cannot be overlooked. For institutional investors seeking exposure to privacy assets while operating within traditional financial channels, Grayscale’s ZEC Trust provided the perfect vehicle. AUM for the trust surged 228% in a single month, from $42 million to $136 million. For an asset with daily trading volume in the hundreds of millions, this represented a meaningful supply tightening on the sell side.

But here’s the deeper logic: institutions weren’t buying privacy coins for the sake of privacy—they were buying them as a hedge against regulatory capture. Every regulated exchange, every KYC requirement, every on-chain surveillance tool pushed a portion of institutional capital toward assets that couldn’t be easily monitored or controlled. Privacy became a form of tail-risk insurance.

Silver vs Gold: The “Bitcoin Silver” Thesis Under Scrutiny

The market posed an audacious narrative: Could ZEC become to Bitcoin what silver is to gold? The logic is superficially compelling. ZEC uses Proof-of-Work, just like Bitcoin, ensuring that network security depends on computational power rather than wealth accumulation (as with Proof-of-Stake). With a hard-capped supply of 21 million coins, ZEC mirrors Bitcoin’s monetary properties. And critically, ZEC’s privacy features provide true fungibility—a property Bitcoin lacks—making it theoretically a “better” currency for confidential transactions.

From a valuation perspective, supporters argued that if ZEC captured even 5-10% of Bitcoin’s market share, substantial upside existed. The historical gold-to-silver ratio has ranged from 1:50 to 1:80; if similar ratios applied to Bitcoin and ZEC, significant revaluation was possible.

However, the skeptics presented a compelling counterargument. If ZEC’s true value lies in being a store of value and medium of exchange, then Ethereum—not ZEC—poses the real challenge to Bitcoin’s dominance. Ethereum commands an enormous ecosystem of DeFi protocols, $350 billion plus in stablecoin value, and institutional recognition that ZEC struggles to match. Ethereum has become a “programmable currency” with genuine utility; ZEC remains more of a single-purpose tool.

This debate found expression in the divergence between ZEC and RAIL (Railgun). RAIL, a privacy protocol native to Ethereum, theoretically benefits from two narratives simultaneously: the privacy wave AND Ethereum’s growing monetary function. Yet throughout late 2024, while ZEC surged toward $580, RAIL stagnated. This divergence suggested that ZEC’s rally transcended pure privacy concerns—it reflected a market reassessment of ZEC’s entire value proposition.

The valuation math reveals the scale of ambition. For RAIL to increase 20x would place it at a $4 billion fully-diluted valuation—a reasonable position within the Ethereum ecosystem. For ZEC to increase 20x would place it at $160 billion, making it the third-largest cryptocurrency after Bitcoin and Ethereum. The market would need to fundamentally believe that ZEC deserves a seat at that table.

The Road Ahead: Unanswered Questions

As of January 2026, ZEC trades at $344—well below its late-2024 peak but up dramatically year-over-year. The core question remains unresolved: Is this the beginning of a multi-year re-evaluation of privacy assets, or the blow-off of a tactical rally?

Three metrics will determine the answer. First: Will on-chain shielded transaction volumes continue growing, or will they revert to historical levels? If genuine privacy demand exists, that activity should persist. Second: Will institutions maintain their ZEC allocations through channels like Grayscale, or will this prove to be a temporary allocation? Third: How will regulatory pressure actually evolve? Will privacy coins face restrictions, or will scarcity value continue appreciation?

The “Bitcoin Silver” narrative is neither settled nor settled. What’s clear is that privacy has shifted from a speculative asset class to a contested frontier where regulatory pressure, institutional interest, and genuine user demand collide. Whether ZEC becomes the beneficiary of this collision—or whether that honor belongs to a more integrated protocol like RAIL—remains the market’s central mystery.