For most of the past two years, privacy coins were considered dead. Exchanges delisted them. Regulators targeted them. Investors moved on to shinier narratives like AI tokens and memecoins.
Then Zcash went up 110% in 30 days.
ZEC climbed from around $346 at the start of May to a peak above $600, making it one of the strongest performing assets in the entire crypto market this month. The move triggered over $62 million in short liquidations in a single day, the second-largest liquidation event behind Bitcoin. Zcash’s market cap has pushed past $9.3 billion, overtaking Monero for the first time.
The catalyst? One of the smartest crypto funds in the world just told everyone they’re betting big on privacy.
What Multicoin Capital Said
At Consensus Miami on Tuesday, Multicoin Capital co-founder Tushar Jain made a statement that moved markets. He revealed that Multicoin has been quietly building a “significant position” in Zcash since February.
Jain didn’t disclose the exact size of the investment, but his reasoning was clear. He argued that as more financial activity moves on-chain, the ability to keep your holdings private will become increasingly important. Bitcoin can resist protocol-level freezes, but every Bitcoin transaction is publicly visible. Anyone can see how much you hold and where you send it.
Zcash offers something different. Its shielded transactions use advanced cryptography to hide the sender, receiver, and amount from public view. In a world where governments are discussing wealth taxes, expanding financial surveillance, and using AI to monitor blockchain activity, Jain believes private stores of value will become a necessity rather than a luxury.
This is a significant shift for Multicoin. Back in 2019, the firm publicly argued against Zcash’s investment thesis. The fact that they’ve reversed course after years of scepticism carries extra weight in the market.
Why Privacy Coins Are Relevant Again
The timing of this rally isn’t random. Several forces are converging to make financial privacy a hot topic again.
First, there’s the AI factor. As artificial intelligence becomes more capable of analysing blockchain data, the privacy guarantees of transparent blockchains like Bitcoin and Ethereum are weakening. AI systems can now trace transaction patterns, cluster wallet addresses, and build detailed profiles of on-chain activity far more effectively than human analysts ever could.
Second, government surveillance of crypto is expanding rapidly. This week’s news that Tether froze $515 million in USDT across 371 wallets is a perfect example. When a single company can freeze half a billion dollars based on wallet addresses, the appeal of assets that can’t be traced or frozen becomes obvious.
Third, wealth tax discussions have heated up in multiple OECD countries. Several governments are exploring ways to tax unrealised crypto gains, which requires knowing what people hold. Privacy coins make that visibility significantly harder.
Grayscale, the largest digital asset manager, said ZEC’s upside is tied to what it calls a “repricing of financial privacy in an AI-driven world.” That framing resonates with a growing number of investors who see privacy not as something to hide behind, but as a fundamental financial right.
The Numbers Behind the Rally
The price action tells only part of the story. What’s happening underneath the surface is equally important.
Zcash’s shielded pool, the portion of the network’s supply held in private, encrypted addresses, now accounts for roughly 30% of all circulating ZEC. That’s up from around 8% in prior years. It means nearly a third of all Zcash in existence is being actively used for its core privacy feature, not just held speculatively on exchanges.
On the derivatives side, the rally was amplified by a massive short squeeze. Traders who had bet against ZEC were forced to buy back their positions as the price surged, creating a feedback loop that pushed prices even higher. Over $62 million in short positions were liquidated in 24 hours, making ZEC the second-largest liquidation event in the entire crypto market that day.
ZEC is now up over 1,500% in the past year. While that kind of return obviously can’t continue indefinitely, it reflects a fundamental reassessment of what privacy coins are worth in today’s environment.
Zcash Is Also Getting Major Technical Upgrades
The rally isn’t purely narrative-driven. Zcash’s development team announced significant technical upgrades at Consensus Miami that could further strengthen the project’s position.
Josh Swihart, CEO of Zcash Open Development Lab, revealed that the network will roll out quantum-recoverable wallets within a month and aims to be fully quantum-proof within 12 to 18 months. Quantum computing is widely seen as a future threat to the cryptographic systems that protect most blockchains. By getting ahead of that threat, Zcash is positioning itself as one of the most security-forward networks in crypto.
Beyond quantum resistance, the team is working on scaling improvements targeting throughput comparable to Visa and Mastercard. Cross-chain swaps into shielded ZEC via Near Intents are already live, making it easier for users on other blockchains to move funds into Zcash’s privacy layer without complicated bridges.
There’s also growing speculation around a potential Grayscale Zcash ETF. While nothing has been formally filed, the combination of institutional interest from Multicoin, Tyler Winklevoss publicly endorsing a bullish ZEC price thesis, and Robinhood recently listing ZEC suggests the infrastructure for an ETF is being put in place.
The Risks You Need to Know About
Before getting swept up in the hype, there are genuine risks worth considering.
Regulatory risk remains the biggest concern. Privacy coins have been delisted from multiple exchanges in the past due to pressure from financial regulators who worry they facilitate money laundering and sanctions evasion. While the regulatory mood has shifted somewhat under the current US administration, a single high-profile case involving Zcash in criminal activity could reignite those concerns overnight.
There’s also a concentration risk in this rally. One major fund disclosure from Multicoin triggered a cascade of buying and short liquidations. If Multicoin were to reduce its position, the same dynamic could work in reverse.
And after a 110% move in 30 days, the technical indicators are signalling overbought conditions. Analysts have flagged $550 as a key resistance level that previously capped a breakout attempt in December. A pullback toward $400 to $450 wouldn’t be unusual after a move of this magnitude.
Privacy coins are inherently volatile and carry unique regulatory risks that most other crypto assets don’t face. As always, invest only what you can afford to lose.
What This Means for the Broader Privacy Coin Sector
Zcash isn’t rallying alone. Monero hit a new all-time high above its 2021 peak earlier this week. Dash has joined the move. Even Aztec Network, a privacy-focused Layer 2 for Ethereum, gained 16% in 24 hours.
The privacy coin sector as a whole is experiencing its strongest period since 2021, driven by the same macro forces: AI surveillance concerns, wealth tax discussions, growing government oversight of public blockchains, and institutional investors treating privacy as a strategic asset class rather than a regulatory liability.
Whether this is the start of a sustained privacy coin cycle or a short-lived narrative trade will depend on whether the fundamental demand for financial privacy continues to grow. Given the direction of travel in AI, government surveillance, and on-chain transparency, the case for privacy isn’t going away anytime soon.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making any investment decisions.
