3 months 20 times, does ZEC's "Bitcoin silver" narrative hold up?

Author: Rhythm 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 completely transparent ledger, thus opening up the entire cryptocurrency world. To this day, privacy remains an important topic in the crypto space.

If you had bought ZEC at the first call by the "child of this version" Mert in this round of the crypto market and held it until now, you would have achieved a rare 20x return in altcoins in less than 3 months.

When ZEC skyrocketed from $238 to $580 in just 40 days, achieving a 20x increase in three months and reaching 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% in the past 7 days, with veteran projects like DASH, DCR, and ZEN seeing increases of over 100%.

Even more surprising was the shift in market sentiment. Just a few months ago, privacy coins were labeled as "regulatory orphans," with Kraken delisting XMR and the EU's 2027 ban draft making investors wary. But now, "privacy is a necessity, not a feature" has become a high-frequency topic on Twitter, Arthur Hayes publicly called for a "ZEC target of $10,000," and Vitalik has repeatedly endorsed ZKsync.

What is the real driving force behind this market trend? Is it the demand for safe havens under regulatory pressure, or pure speculative trading? More importantly, how long can this enthusiasm last?

Who is Leading the Surge?

ZEC is undoubtedly the absolute leader in this market trend. Starting from $237.84 on October 23, it reached $532.06 by November 7, achieving a 120% increase in just 40 days, with a cumulative increase of 700% this year. This price not only set a new high since 2018 but also brought ZEC back into the sight of mainstream investors.

Looking back at several key time points, we can clearly see the trajectory of ZEC's rise:

• October 1: Grayscale announced the reopening of the ZEC Trust (ZCSH) and offered fee reductions and staking features, causing ZEC to surge 22% on the same day;
• October 24: A "flag breakout" appeared in the technical pattern, with on-chain indicators OBV and CMF rising in sync, leading to a 40% increase in 4 days;
• November 1: Open interest (OI) in futures surpassed $770 million for the first time, Arthur Hayes called for a "target of $10,000" again, triggering a short squeeze with a 15% increase in one day;
• November 7: The price broke through $532, with a 24-hour spot trading volume reaching $1.75 billion, 1.4 times the monthly average level;

More noteworthy is the improvement in fundamentals: the balance of ZEC's shielded pool surpassed 5 million coins for the first time, accounting for about 30% of the circulating supply, which is equivalent to $2.5 billion choosing a completely anonymous storage method. Daily transaction volume increased from 10,000 to 12,600, with the proportion of shielded transactions rising from less than 10% to 25-30%. These data indicate that ZEC's rise is not purely speculative but is supported by real privacy demand.

ZEC's strong performance ignited the entire privacy sector, leading to a resurgence of several once-forgotten veteran projects:

The collective rise is driven by two key factors:

First is 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, which not only brought liquidity but also amplified the effect of high-leverage derivatives. For example, DASH's 24-hour spot and contract trading volume exceeded $1.2 billion, surging 2.8 times month-on-month.

Second is the substantial progress in technology or protocols. On November 2, DASH became the native asset of the Maya Protocol, achieving cross-chain anonymous swapping; ZEN completed its migration to Base L2, doubling zk-SNARK efficiency; SCRT and ROSE benefited from the new narrative of privacy computing combined with AI.

In addition, there is a special player in the privacy sector: ZKsync (ZK).

From a technical perspective, ZK is a Layer-2 scaling solution for Ethereum, where transactions on the main chain remain transparent; however, due to its optional ZK privacy features and the Prividium enterprise private chain, mainstream platforms like CoinGecko and Santiment categorize it as part of the privacy sector.

In the past 7 days, ZK's price increased by over 130%, becoming one of the top gainers in the privacy track. This performance is driven by three catalysts:

• The performance leap from the Atlas upgrade: The full activation of the Atlas upgrade on November 1 raised theoretical TPS from 2,000 to 15,000-30,000, reducing ZK finality from 3 hours to 1 second, and lowering the cost per transaction from $0.0013 to below $0.0001. Previously, ZK's biggest limitation was its cost compared to OP, but this issue has been significantly improved after the Atlas upgrade.
• The reconstruction of the token economic model: The "ZKnomics Part I" proposal announced on November 4 first redirected network transaction fees and enterprise authorization fees back to the Treasury for "buyback-destroy + staking dividends," transforming ZK from a pure governance token into a cash flow asset. Estimated staking APY could reach 8-12%.
• Vitalik's public endorsement: On November 1, Vitalik tweeted twice that ZKsync was "undervalued," leading to a 30-fold increase in ZK's trading volume on that day. The endorsement from a core figure played a crucial catalytic role in market sentiment.

What are the rising logics of the privacy narrative?

"Safe Haven Premium" Under Regulation

On the surface, tightening regulations should suppress privacy coins, but the reality is quite the opposite; it is precisely because of regulatory pressure that the demand for privacy has been stimulated.

The tightening of policies is accelerating. The EU's draft Anti-Money Laundering Regulation (AMLR) explicitly states that it will completely restrict the trading of privacy coins within the EU by 2027; the U.S. Financial Crimes Enforcement Network (FinCEN) also plans to intensify scrutiny of "high-risk self-custody addresses." With Bitcoin and Ethereum spot ETFs entering the regulatory spotlight, all on-chain transactions face stricter tracking.

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

As a result, European and American media have even named this round of market activity the "Crypto Anti-Surveillance Wave." ZEC and XMR are redefined as "the last line of defense for on-chain anonymity." The consensus on social media is even more direct: "Privacy is not a feature, but a fundamental right."

On-chain data confirms the growth of real demand.

The balance of ZEC's shielded pool increased from 4 million coins to 4.9 million coins in 40 days, a growth of 25%; the proportion of shielded transactions rose from less than 10% to 25-30%, indicating that more and more users are choosing completely anonymous transaction methods. The more users there are, the stronger the privacy guarantee, and the more evident the network effect becomes.

The increase in on-chain activity for ZEC, DASH, and ROSE is also significant evidence. ZEC's daily transaction volume grew from about 10,000 on October 1 to 12,600 on November 7, an increase of 26%. DASH's average daily on-chain transaction count over 30 days rose by 15%, from about 1,300 to 1,500; ROSE surged by 200%, from about 3,300 to 10,000.

The return of ZK's TVL is also noteworthy. After the Atlas upgrade was activated, the TVL of ZKsync Era rebounded from $500 million to $600 million, a 20% increase, achieved against the backdrop of a decline in the overall Layer-2 ecosystem's TVL.

Data on inflows to trading platforms also reflects the trend of locked positions. ZEC's net inflow to trading platforms dropped sharply from $41.8 million to $3.66 million within 48 hours, a decrease of 91%. This indicates that holders are not short-term speculators but are optimistic about the long-term growth of privacy demand.

The Grayscale Effect on ZEC

The return of institutional funds is one of the most important catalysts for this market trend.

The restart of Grayscale's Grayscale ZEC Trust was the most significant event in October. On October 1, Grayscale announced the reopening of new subscriptions for the ZCSH trust and offered two major upgrades: waiving management fees and adding staking features, providing an annualized yield of 4-5%. This combination significantly improved the risk-return ratio.

Why is the name "Grayscale" so valuable? Because for the past decade, Grayscale has been almost the only compliant bridge and price barometer for traditional institutions to allocate crypto assets. Its trusts issued in the U.S. have long provided crypto exposure for pensions, family offices, and hedge funds, making it a leading indicator of institutional entry scale and preference changes.

Since launching the first Bitcoin trust in 2013, Grayscale has successively laid out more than a dozen single-asset trusts for ETH, SOL, LTC, BCH, ETC, FIL, XLM, and others, many of which have experienced the typical "Grayscale effect"—fund inflows driving price increases, expanding premiums, and forming consensus narratives. The ZEC Trust (ZCSH) was established in 2017 and also saw a phase of skyrocketing premiums during the 2020-2021 bull market, becoming a major target for institutional allocation in the privacy sector.

However, after regulatory tightening and privacy coins facing compliance pressure, ZCSH suspended subscriptions in 2022 and entered a period of dormancy in 2023. This restart signifies that Grayscale is once again endorsing privacy assets, and its signaling significance may even outweigh the funds themselves.

Data shows that ZCSH's AUM (Assets Under Management) surged by 228% within a month, from about $42 million to $136 million, accounting for about 1.9% of ZEC's circulating supply. For an asset with a daily trading volume of hundreds of millions of dollars, nearly 2% of the chips being locked in the trust significantly tightens the supply side.

A deeper logic is the indirect effect of ETFs. The approval of Bitcoin and Ethereum spot ETFs has brought these assets into a strict regulatory framework, where every transaction is traceable. Some institutions and high-net-worth individuals, in order to avoid this transparency, have begun to shift their funds towards anonymous assets. Grayscale's ZEC Trust conveniently provides a compliant channel—offering exposure to privacy coins while operating through traditional financial channels.

The Shared Position of the "Child of This Version" in the Crypto Circle

Social media has played an amplifying role in this round of market activity.

During ZEC's rise, Mert (@0xMert_), regarded as the child of this version of the Solana ecosystem, was undoubtedly one of the key voices behind the price. As the CEO of Helius, a core infrastructure of Solana, and one of the most recognized voices in the Solana ecosystem, Mert began heavily recommending ZEC when it was at $30, and has continued to call for it almost daily on X, live streams, and podcasts. As a result, the ZEC community has a significant overlap with the Solana community.

Adding to the catalyst was Arthur Hayes's continuous calls for entry. This co-founder of BitMEX is known as one of the "most prophetic people regarding cycle turns" in the last bull market. On October 31, he first mentioned a "ZEC target of $1,000," which was already astonishing; then on November 1, he directly raised it to a "target of $10,000," positioning ZEC as "a safe-haven asset in the crypto market." This tweet garnered over 200,000 interactions in a single day, causing ZEC's trading volume to soar and short-term prices to rise by 15%.

Subsequently, Naval Ravikant's comments elevated ZEC's narrative from "speculative asset" to the height of "a battle of values and technological routes." Naval redefined the value foundation of privacy assets with the statement, "Privacy is a fundamental right, not a tool for crime."

As the "biggest fan of ZK," Vitalik tweeted on November 1 that ZKsync was "undervalued," directly driving a 30-fold increase in trading volume for ZK-related assets, fueling the ZK narrative, and making "ZK Season is here" a hot topic.

Is ZEC Really the "Silver to Bitcoin"?

In the rise of ZEC's price, the community has also put forth a narrative of "silver to Bitcoin." Does this positioning really hold water?

Optimists believe that ZEC's rise is not just due to the privacy narrative. A key piece of evidence is the divergence in market performance: if ZEC's rise were solely due to privacy demand, then RAIL, as a core privacy project in the EVM ecosystem, should have benefited simultaneously.

RAIL is a privacy protocol on the Ethereum ecosystem that can anonymize ETH, ERC-20 tokens, and NFTs. More importantly, Vitalik himself has not only used RAIL to anonymize millions of dollars worth of ETH but has also natively integrated RAIL into his new project Kohaku (a wallet SDK), with MetaMask and OKX wallets as partners. From a fundamental perspective, RAIL charges a 0.25% fee on funds entering and exiting the privacy pool, and 77% of the token supply is staked and locked for 30 days, meaning the actual circulating supply is far lower than the surface data. This is a project with a clear business model and token economics, rather than a purely speculative target.

However, by mid to late October, a key signal emerged in the market: ZEC continued to soar while RAIL began to stagnate. This may indicate that ZEC's rise is not just about privacy, but rather that the market is re-evaluating its monetary attributes and value storage function. In other words, privacy may just be a catalyst; the real narrative is whether "ZEC can become the silver to Bitcoin"—a narrative with a higher ceiling.

Optimists believe that ZEC possesses all the elements to become "the silver to Bitcoin." From a technical perspective, ZEC uses a proof-of-work (POW) mechanism, securing the network through computational competition like Bitcoin, which aligns more with the principle of "monetary neutrality"—no one can control the network through holding coins. ZEC's total supply is fixed at 21 million coins, and this hard cap supply mechanism is a core feature of value storage assets, avoiding the risk of inflation dilution. More critically, ZEC's privacy features are not a burden but an advantage: in a world where regulation is tightening and on-chain transactions are completely transparent, privacy is shifting from "an optional feature" to "a monetary necessity." When every Bitcoin transaction can be traced and every address can be tagged, ZEC's shielded transactions provide true substitutability—one of the most fundamental attributes of currency.

From a valuation perspective, optimists also point out that ZEC's market cap relative to Bitcoin is still extremely low, indicating significant revaluation potential. If ZEC is truly accepted by the market as a value storage asset, even capturing just 5-10% of Bitcoin's share would imply several times the upside potential. Historically, the value ratio of silver to gold has fluctuated between 1:50 and 1:80; if measured by the same logic, ZEC has a huge valuation gap to close relative to Bitcoin.

However, pessimists offer a completely different perspective.

They argue that if ZEC's value truly lies in "currency/value storage," then the real challenger to Bitcoin is Ethereum, not ZEC.

Ethereum not only has smart contracts, a vast DeFi ecosystem, and institutional recognition, but more importantly, it has effectively played the role of "programmable currency"—hundreds of billions of dollars in stablecoins circulate on Ethereum, and trillions of dollars in value are locked in Ethereum's DeFi protocols. In contrast, while ZEC has privacy and fixed supply, it lacks ecological depth and application scenarios, making it more like a "single-function tool" rather than "a versatile currency."

Within this framework, pessimists are more optimistic about projects like Railgun. RAIL, by enhancing Ethereum's privacy, is effectively improving ETH's monetary attributes. This means that RAIL is not only a beneficiary of the privacy narrative but also a beneficiary of Ethereum's monetary narrative—it stands on a larger, more mature ecosystem rather than trying to build a new monetary system from scratch.

From a valuation perspective, the potential for price increases between the two is vastly different. If RAIL rises 20 times, its fully diluted valuation (FDV) will reach $4 billion, which is consistent with the valuations of other top projects in the Ethereum ecosystem, making it easy for the market to understand and accept. However, if ZEC rises 20 times, its FDV will reach $160 billion, making it the third-largest crypto asset by market cap, only behind Bitcoin and Ethereum. This requires the market to believe that ZEC can truly stand on equal footing with Bitcoin and Ethereum—an extremely high bar to clear.

This is not a question that can be resolved through theoretical debate, but rather one that the market needs to answer with real actions: Will ZEC's shielded pool balance continue to grow in the next 12-24 months? Will institutions allocate ZEC through compliant channels like Grayscale? Will regulatory pressure crush ZEC or instead reinforce its scarcity?

The answers to these questions will determine whether the narrative of ZEC as "the silver to Bitcoin" can hold, and will also dictate the sustainability and depth of this round of privacy coin market activity.