Author | Messari
Translation | Odaily Planet Daily (@OdailyChina)
Translator | Dingdang (@XiaMiPP)
Editor's Note: As Bitcoin repeatedly "paints the door," with prices oscillating between $80,000 and $90,000, market attention may still largely focus on Bitcoin itself. However, the representative asset of the privacy track, ZEC, has once again emerged with an independent market trend, breaking through $500, currently reported at $518, with an increase of nearly 40% from its recent low. More ironically, ZEC was once listed as a candidate for delisting in Binance's voting, yet it welcomed its own explosive moment in late 2025, with a peak increase of nearly 13 times.
This shift from "marginal asset" to "market repricing" raises a more worthy question: Is the rise of ZEC merely a short-term emotional and capital concentration outburst and manipulation, or is privacy as a monetary attribute being systematically reassessed? Messari attempts to explain why ZEC has been re-seen by the market at this time point from multiple dimensions, including monetary attributes, regulatory environment, and structural changes in Bitcoin. The following content is excerpted from @MessariCrypto published "The Crypto Theses 2026".
Among all cryptocurrencies outside of BTC and ETH, ZEC experienced the most significant shift in "monetary attribute recognition" in 2025. For a long time, ZEC has been floating outside the "monetary hierarchy of cryptocurrencies," regarded as a niche privacy coin rather than a true monetary asset. However, as concerns over financial surveillance have intensified, and Bitcoin accelerates towards institutionalization, privacy is being re-evaluated by the market as a core monetary attribute, no longer just a preference of a few geeks or ideological groups.
Bitcoin has proven that non-sovereign digital currencies can operate on a global scale; however, it has not retained the privacy attributes that people have long taken for granted when using physical cash. Every transaction is broadcast to a completely transparent public ledger, and anyone can track and analyze it using a block explorer. This is highly ironic: a tool intended to weaken state control has inadvertently constructed a financial "panopticon."
Zcash combines Bitcoin's monetary policy with the privacy attributes of physical cash through zero-knowledge cryptography. In the current digital asset system, no asset can provide the long-term, battle-tested, and certain privacy guarantees like the latest version of Zcash's privacy pool. This makes ZEC a form of "private currency" that is extremely difficult to replicate.
We believe that the market has re-evaluated ZEC relative to BTC based on this point—viewing it as an "ideal form of private cryptocurrency" and positioning it as a hedging tool against the rise of surveillance states and the institutionalization of Bitcoin.
Since the beginning of this year, ZEC has surged 666% against BTC, with a market capitalization rising to about $7 billion, briefly surpassing XMR in market value, becoming the highest-valued privacy coin. This relative strength indicates that the market is viewing ZEC alongside XMR as a viable form of private cryptocurrency.
Privacy on Bitcoin: A Nearly Impassable Path
It is almost impossible for Bitcoin to introduce a privacy pool structure similar to Zcash at the protocol level, so the claim that "Bitcoin will ultimately absorb Zcash's value proposition" does not hold.
The Bitcoin community is known for its highly conservative technical culture, prioritizing the solidification of mechanisms to minimize attack surfaces and maintain the integrity of the monetary system. If privacy features were to be embedded at the protocol level, it would require modifications to Bitcoin's core architecture, which would introduce potential inflation vulnerability risks, threatening its core monetary credibility. For Zcash, this risk is acceptable because privacy itself is its core value proposition.
Moreover, introducing zero-knowledge cryptography at the base layer would significantly reduce the blockchain's scalability. To prevent double spending, nullifiers and hashed ticket structures must be used, which brings long-term concerns of "state bloat." Nullifiers are essentially a list that only grows over time, potentially leading to a substantial increase in resource costs required for running nodes. If nodes are forced to store a continuously expanding set of nullifiers, the degree of decentralization in Bitcoin will be substantially weakened, as the barriers to running nodes will continually rise over time.
As mentioned earlier, in the absence of soft forks capable of supporting ZK verification (such as OP_CAT), no Bitcoin layer two solution can achieve Zcash-level privacy while inheriting Bitcoin's security. You either introduce trusted intermediaries (like consortium structures), accept long and highly interactive withdrawal delays (like the BitVM model), or completely outsource execution and security to an independent system (like sovereign Rollups).
Until this landscape changes, there is no realistic path that balances Bitcoin's security with Zcash's privacy. This is fundamentally why ZEC possesses unique value as a privacy cryptocurrency.
A Privacy Hedge Against CBDCs
The urgency of privacy needs has been further amplified against the backdrop of various central bank digital currencies (CBDCs) being rolled out. Currently, about half of the countries worldwide are researching or have already launched 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 designated merchants or within specific geographical areas.
This is not a dystopian fantasy but a reality that has already occurred:
- Nigeria (2020): During the protests against police violence, the Nigerian central bank froze the bank accounts of several protest organizers and feminist groups, forcing the movement to rely on cryptocurrency to sustain operations.
- United States (2020–2025): Regulators and large banks have implemented de-banking on a series of legitimate but politically unpopular industries under the guise of "reputational risk." This issue became so severe that the White House ordered an investigation, and a research report released by the OCC in 2025 documented systematic restrictions on the oil and gas, firearms, adult content, and cryptocurrency industries.
- Canada (2022): During the "Freedom Convoy" protests, the Canadian government invoked the Emergency Act to freeze the bank and crypto accounts of protesters and small donors without court authorization. The Royal Canadian Mounted Police even blacklisted 34 self-custodied crypto wallet addresses, demanding that all regulated exchanges cease transactions with them. This incident clearly demonstrates that Western democracies are also willing to weaponize the financial system to suppress political dissent.
In an era where "money can be programmed to control you," ZEC provides a clear "exit mechanism." However, the significance of Zcash extends beyond merely escaping CBDCs; it is becoming increasingly important for protecting Bitcoin itself.
A Hedge Against Bitcoin's "Co-optation"
As emphasized by figures like Naval Ravikant and Balaji Srinivasan, Zcash is essentially an insurance policy for maintaining the financial freedom vision of Bitcoin.
Bitcoin is rapidly concentrating in centralized entities: centralized exchanges hold about 3 million BTC, ETFs hold about 1.3 million, and publicly traded companies hold about 829,000. In total, approximately 5.1 million BTC (24% of the total supply) is currently held by third-party custodians.
This means that about a quarter of the BTC supply theoretically faces the risk of regulatory seizure. This structure is highly similar to the conditions of centralization during the U.S. government's gold confiscation in 1933. At that time, the U.S. government, through Executive Order 6102, forced citizens to surrender gold reserves exceeding $100 and exchange them for paper currency at a fixed price, a process that did not rely on violence but was completed through the banking system.
For Bitcoin, the path is entirely consistent. Regulators do not need to hold your private keys; they only need legal jurisdiction over custodians. Once the government issues enforcement orders to institutions like BlackRock or Coinbase, these companies, under legal obligation, can only freeze and hand over the BTC they hold. Without modifying a single line of code, nearly a quarter of the BTC supply could be "nationalized" overnight.
Furthermore, under the premise of blockchain's high transparency, self-custody is no longer a sufficient defensive measure. Any BTC withdrawn from KYC exchanges or brokerage accounts will ultimately leave traceable "paper trails."
BTC holders can exchange for Zcash to sever this custodial and regulatory link, achieving "air-gapped" wealth. Once funds enter Zcash's privacy pool, their destination will become a cryptographic "black hole" in the eyes of observers. Regulators can see the funds leaving the Bitcoin network but cannot ascertain their final destination. Of course, the strength of this anonymity entirely depends on operational security: address reuse and acquiring assets through KYC exchanges will leave permanent associations before entering the privacy pool.
The Road to PMF is Being Paved
The demand for privacy currencies has always existed, but the problem has been that Zcash has historically struggled to "come to the users." For a long time, high memory usage, lengthy proof times, and complex desktop configurations made privacy transactions slow and daunting for ordinary users. A series of recent breakthroughs at the infrastructure level have systematically dismantled these barriers.
The Sapling upgrade reduced memory requirements by 97% (to about 40MB) and shortened proof times by 81% (to about 7 seconds), making mobile privacy transactions possible.
While Sapling addressed the speed issue, trusted setup remained a focal point of concern within the privacy community. Subsequently, Orchard completely removed the reliance on trusted setups by introducing Halo 2 and introduced Unified Addresses, integrating transparent addresses and private addresses into a single entry point, significantly reducing the cognitive burden on users.
These improvements ultimately led to the release of the Zashi mobile wallet in March 2024. With the abstract design of Unified Addresses, Zashi simplified the operation of privacy transactions to just a few clicks on the screen, making "privacy" the default experience.
After resolving UX issues, distribution became the final barrier. Users still relied on centralized exchanges to deposit and withdraw ZEC to their wallets. The integration of NEAR Intents eliminated users' dependence on centralized exchanges, allowing them to directly exchange assets like BTC and ETH for privacy-mode ZEC, and even use privacy ZEC to pay any address on 20 different chains.
These initiatives collectively helped Zcash bypass historical friction, access global liquidity, and align with the real demands of the market.
Looking Ahead
Since 2019, the rolling correlation coefficient between ZEC and BTC has been steadily declining, from 0.90 to a recent 0.24; meanwhile, the rolling Beta of ZEC against BTC has risen to an all-time high. This divergence indicates that the market is assigning an independent premium to Zcash's privacy attributes.
We do not believe that ZEC will surpass BTC. Bitcoin has established its position as the most reliable cryptocurrency due to its transparent supply and auditability; meanwhile, Zcash, as a privacy coin, inevitably has to bear the trade-off between privacy and auditability.
However, ZEC can certainly carve out its own space without replacing BTC. The two are not solving the same problem but are playing different roles within the cryptocurrency ecosystem: BTC is optimized for transparency and security as a "robust cryptocurrency," while ZEC is born for privacy and confidentiality as a "private cryptocurrency."
In this sense, ZEC's success does not depend on defeating Bitcoin but on complementing the attributes that Bitcoin has deliberately set aside.
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