ZEC surges 20 times in three months, is the "Silver to Bitcoin" narrative still valid?

Author: Rhythm Little Worker, BlockBeats

The pursuit of privacy by crypto punks can be traced back to the birth of Bitcoin 16 years ago, which embedded privacy mechanisms into a fully transparent ledger, thus opening up the entire cryptocurrency world. To this day, privacy remains a key topic in the crypto space.

If you bought and held ZEC since Mert, the “version one” of this cycle’s coin circle, you could have achieved a rare 20x return among altcoins this year in less than 3 months.

When ZEC surged from $238 to $580 within 40 days, a 20x increase over three months, hitting a seven-year high, the crypto market realized that a long-forgotten sector was making a strong comeback. The entire privacy coin sector surged approximately 80% over the past 7 days, with veteran projects like DASH, DCR, and ZEN increasing by over 100%.

What’s even more surprising is the shift in market sentiment. Just a few months ago, privacy coins were labeled as “regulatory orphans,” with Kraken delisting XMR and the EU draft ban in 2027 making investors avoid them. But now, “privacy is a necessity, not just a feature,” has become a frequent topic on Twitter, Arthur Hayes publicly targeting $10,000 for ZEC, and Vitalik endorsing ZKsync multiple times.

What is the true driving force behind this rally? Is it risk-hedging demand under strict regulation, or pure capital speculation? More importantly, how long can this hot streak last?

Who are leading the rally?

ZEC is undoubtedly the absolute leader in this cycle. Starting at $237.84 on October 23, it reached $532.06 on November 7, a 120% increase in 40 days, with a total gain of 700% year-to-date. This price not only set a new high since 2018 but also brought ZEC back into the mainstream investor spotlight.

Reviewing key moments, we can clearly see ZEC’s upward trajectory:

October 1: Grayscale announced the reopening of ZEC Trust (ZCSH), offering fee waivers and staking features, causing ZEC to jump 22% on the same day;

October 24: Technical pattern shows a “flag breakout,” with on-chain indicators OBV and CMF rising in sync, leading to a 40% increase over 4 days;

November 1: Futures open interest (OI) surpasses $770 million for the first time, Arthur Hayes again calls for “$10,000,” triggering short squeeze, with a 15% intraday rise;

November 7: Price breaks $532, with 24-hour spot trading volume hitting $1.75 billion, 1.4 times the monthly average;

More importantly, fundamentals are improving: the ZEC shielded pool balance first exceeds 5 million coins, accounting for about 30% of circulating supply, equivalent to $2.5 billion in fully anonymous storage. Daily trading volume rises from 10,000 to 12,600 transactions, with shielded transactions increasing from less than 10% to 25-30%. These data indicate that ZEC’s rise isn’t just hype but supported by genuine privacy demand.

ZEC’s strong performance has ignited the entire privacy sector, with a batch of once-forgotten veteran projects also experiencing explosive growth:

Behind this collective surge are two key drivers:

First, the concentrated launch of new products on trading platforms. From November 2-6, Binance, OKX, and Bitget successively launched perpetual contracts or new spot trading pairs for DASH, ZEN, and SCRT, not only boosting liquidity but also amplifying leverage derivatives. For example, DASH’s 24-hour spot plus contract trading volume exceeded $1.2 billion, a 2.8x increase from before.

Second, substantial progress in technology or protocols. On November 2, DASH became the native asset of Maya Protocol, enabling cross-chain anonymous swaps; ZEN completed migration to Base Layer 2, doubling zk-SNARK efficiency; SCRT and ROSE benefited from new narratives combining privacy computing and AI.

Additionally, the privacy sector features a special player: ZKsync (ZK).

From a technical standpoint, ZK is an Ethereum Layer-2 scaling solution, with main chain transactions still transparent; but due to its optional ZK privacy features and Prividium enterprise private chains, platforms like CoinGecko and Santiment classify it within the privacy sector.

In the past 7 days, ZK’s price surged over 130%, making it one of the top performers in the privacy track. This performance is driven by three catalysts:

Atlas upgrade’s performance leap: On November 1, the full activation of the Atlas upgrade increased theoretical TPS from 2,000 to 15,000-30,000, with ZK finality reduced from 3 hours to 1 second, and transaction fees dropping from $0.0013 to below $0.0001. Previously, ZK’s high costs compared to OP were a major limitation; Atlas significantly alleviated this.

Tokenomics restructuring: On November 4, the “ZKnomics Part I” proposal was announced, which first directs network transaction fees and enterprise licensing fees back to the treasury for buy-back and burn plus staking rewards, transforming ZK from a purely governance token into a cash-flow asset. Estimated staking APY could reach 8-12%.

Vitalik’s public endorsement: On November 1, Vitalik tweeted that ZKsync “is underrated,” causing ZK’s trading volume to explode 30-fold. Such endorsements from key figures serve as critical market catalysts.

What are the narratives behind the privacy rally?

“Safe haven premium” under regulation

On the surface, tighter regulation should suppress privacy coins, but the reality is quite the opposite. It’s precisely the regulatory pressure that has fueled privacy demand.

Policy tightening is accelerating. The EU’s AMLR draft explicitly proposes to ban privacy coins within the EU by 2027; the US FinCEN plans to scrutinize “high-risk self-custodied addresses.” As spot ETFs for Bitcoin and Ethereum enter regulatory scrutiny, all on-chain transactions face stricter tracking.

As compliant assets become more transparent, privacy assets are becoming scarce.

Therefore, Western media have even named this cycle’s rally as the “Crypto Anti-Surveillance Wave.” ZEC and XMR are redefined as the “last line of on-chain anonymity.” Social media consensus is even more direct: “Privacy is not just a feature but a fundamental right.”

On-chain data confirms the growth of genuine demand.

ZEC’s shielded pool balance increased from 4 million to over 4.9 million coins in 40 days, a 25% rise; shielded transactions jumped from less than 10% to 25-30%, indicating more users opting for fully anonymous transactions. The more users, the stronger the privacy guarantees, and the network effect intensifies.

The increase in on-chain activity for ZEC, DASH, and ROSE also supports this. ZEC’s daily transaction count rose from about 10,000 on October 1 to 12,600 on November 7, a 26% increase. DASH’s 30-day average on-chain transactions grew 15%, from around 1,300 to 1,500. ROSE surged 200%, from about 3,300 to 10,000 transactions.

ZK’s TVL (Total Value Locked) is also worth noting. After the Atlas upgrade, ZKsync Era’s TVL rebounded from $500 million to $600 million, a 20% increase amid a declining overall Layer-2 TVL.

Trading platform inflow data also reflect the trend of token locking. ZEC’s net inflow on exchanges over 48 hours plummeted from $41.8 million to $3.66 million, a 91% drop. This indicates that holders are not just speculating short-term but are optimistic about the growing privacy demand for the long term.

The Grayscale effect on ZEC

Institutional capital returning is one of the most important catalysts for this cycle.

The reopening of Grayscale’s ZEC Trust (ZCSH) in October was a major event. On October 1, Grayscale announced the relaunch of ZCSH with two major upgrades: no management fee and the addition of staking, offering 4-5% annual yield. This significantly improved the risk-reward profile.

Why is “Grayscale” so highly regarded? Because over the past decade, Grayscale has been almost the only compliant bridge for traditional institutions to allocate to crypto assets and a leading price indicator. Its trusts, issued in the US, have long provided exposure for pension funds, family offices, and hedge funds, making it a leading indicator of institutional entry and preference shifts.

Since launching its first Bitcoin trust in 2013, Grayscale has expanded into ETH, SOL, LTC, BCH, ETC, FIL, XLM, and more, with many assets experiencing the “Grayscale effect” — inflows driving prices higher, premiums expanding, and consensus narratives forming. The ZEC trust (ZCSH), established as early as 2017, experienced a surge during the 2020-2021 bull market, once becoming a primary institutional holding in the privacy sector.

However, with increasing regulation and compliance pressures on privacy coins, ZCSH suspended subscriptions in 2022 and went dormant in 2023. Its revival signals Grayscale’s renewed endorsement of privacy assets, which is arguably more significant than the capital itself.

Data shows ZCSH’s AUM (Assets Under Management) exploded 228% in one month, from about $42 million to $136 million, representing roughly 1.9% of ZEC’s circulating supply. For an asset with daily trading volumes in the hundreds of millions, nearly 2% of supply locked in the trust indicates significant supply-side tightening.

Deeper logic points to the ETF’s indirect effect. The approval of spot ETFs for Bitcoin and Ethereum has brought these assets into strict regulatory frameworks, making every transaction traceable. Some institutions and high-net-worth individuals, seeking to avoid this transparency, are turning to anonymous assets. Grayscale’s ZEC trust provides a compliant channel—offering exposure to privacy coins while operating through traditional financial channels.

The common positions of the coin circle “version ones”

Social media has played a amplifying role in this rally.

In ZEC’s rise, Mert (@0xMert_), regarded as the “version one” of Solana’s ecosystem, has been one of the most influential voices behind the scenes. As CEO of Helius, a core infrastructure provider for Solana, and one of the most recognized figures in the Solana community, Mert began heavily recommending ZEC at around $30, almost daily shouting on X, live streams, and podcasts. As a result, ZEC’s community overlaps significantly with the Solana community.

Even more catalytic are Arthur Hayes’s continuous calls to buy. The former BitMEX co-founder is known as one of the best market forecasters in the last bull cycle. On October 31, he first tweeted a “$1,000 target for ZEC,” which was already impressive; then on November 1, he raised it to “$10,000,” labeling ZEC as a “crypto market safe haven.” This tweet generated over 200,000 interactions in a single day, causing ZEC’s trading volume to spike and short-term price to jump 15%.

Later, Naval Ravikant’s comments elevated ZEC’s narrative from “speculative asset” to “a battle of values and technological routes.” Naval redefined the fundamental value of privacy assets with the statement: “Privacy is a basic right, not a tool for crime.”

As the “biggest ZK enthusiast,” Vitalik also tweeted on November 1 that ZKsync “is underrated,” which caused ZK-related assets’ trading volume to surge 30 times, fueling the ZK season and making it a hot topic.

Is ZEC really “Bitcoin’s silver”?

In ZEC’s price rally, the community has also promoted the narrative of “Bitcoin’s silver.” Is this positioning justified?

Optimists believe ZEC’s rise isn’t just due to privacy narratives. A key piece of evidence is the market’s differentiation: if ZEC’s rally was solely driven by privacy demand, then RAIL, as a core privacy project in the Ethereum ecosystem, should benefit in tandem.

RAIL is an Ethereum-based privacy protocol that anonymizes ETH, ERC-20 tokens, and NFTs. More importantly, Vitalik himself has used RAIL to anonymize millions of dollars worth of ETH and integrated RAIL natively into his new project Kohaku (a wallet SDK). MetaMask and OKX wallets are partners. Fundamentally, RAIL charges a 0.25% fee on funds entering and exiting privacy pools, and 77% of its token supply is staked and locked for 30 days, making its actual circulating supply much lower than surface data. It’s a project with a clear business model and tokenomics, not just a speculative asset.

However, by mid to late October, a key signal appeared: ZEC continued to surge while RAIL stagnated. This may suggest that ZEC’s rally isn’t just about privacy but also about the market re-pricing its monetary properties and store-of-value function. In other words, privacy might be just a catalyst; the real narrative is “Can ZEC become Bitcoin’s silver?” — a higher ceiling story.

Optimists argue ZEC has all the elements to become “Bitcoin’s silver.” Technically, ZEC uses proof-of-work (POW), competing via hashing power like Bitcoin, which aligns with the “money neutrality” principle—no one can control the network through holdings. Its total supply is capped at 21 million coins, a core feature for value storage assets to prevent inflationary dilution. More critically, ZEC’s privacy features are an advantage, not a burden: in a world with tightening regulation and fully transparent on-chain transactions, privacy shifts from an “optional feature” to a “necessity.” When every Bitcoin transaction can be tracked and addresses labeled, ZEC’s shielded transactions offer real fungibility—one of the fundamental properties of money.

From a valuation perspective, optimists also point out that ZEC’s market cap remains very low relative to Bitcoin, implying huge revaluation potential. If ZEC is truly accepted as a store of value, even capturing 5-10% of Bitcoin’s market share would mean multiple times upside. Historically, the silver-to-gold value ratio has fluctuated between 1:50 and 1:80; applying similar logic, ZEC still has a significant valuation gap to close relative to Bitcoin.

But pessimists hold a very different view.

They argue that if ZEC’s value truly lies in “money/store of value,” then Ethereum, not ZEC, is the real challenger to Bitcoin.

Ethereum not only has smart contracts, a vast DeFi ecosystem, and institutional recognition, but it also already plays the role of “programmable money”—hundreds of billions of dollars in stablecoins circulate on Ethereum, and trillions of dollars are locked in DeFi protocols. Compared to ZEC, which has privacy and a fixed supply but lacks ecosystem depth and application scenarios, it’s more like a “single-function tool” than a “comprehensive currency.”

Within this framework, pessimists favor projects like Railgun more. RAIL enhances Ethereum’s privacy, effectively improving ETH’s monetary properties. This means RAIL benefits not only from the privacy narrative but also from Ethereum’s broader monetary narrative—standing on a larger, more mature ecosystem rather than trying to build a new monetary system from scratch.

From a valuation standpoint, the growth potential of both differs greatly. If RAIL’s price increases 20x, its fully diluted valuation (FDV) would reach $4 billion, roughly consistent with other top Ethereum projects, making it easier for markets to accept. But if ZEC increases 20x, its FDV would reach $160 billion, making it the third-largest crypto asset after Bitcoin and Ethereum. That requires the market to believe ZEC can stand shoulder-to-shoulder with Bitcoin and Ethereum—a very high threshold.

This isn’t a question that can be settled through debate alone; it requires market action over the next 12-24 months: can ZEC’s shielded pool balance continue to grow? Will institutions use compliant channels like Grayscale to allocate to ZEC? Will regulatory pressure crush ZEC or make its scarcity even more valuable?

Answers to these questions will determine whether the “Bitcoin’s silver” narrative for ZEC holds and will also influence the sustainability and depth of this privacy coin rally.