Zcash (ZEC) is a bet that the rise of AI surveillance will make financial privacy more valuable, and the crypto market is undervaluing that possibility, according to asset manager Grayscale.
“Zcash is almost 10 years old but could be entering a new chapter. Use of its protection technology is increasing and new capital is entering the ecosystem to support Zcash’s wallet development and mining,” analyst Michael Zhao wrote in a report published Friday.
ZEC is a privacy-focused cryptocurrency that uses zero-knowledge proofs to hide transaction details, allowing users to protect the sender, recipient, and amount, while verifying transfers on a public blockchain.
Designed as a more private alternative to Bitcoin the largest cryptocurrency, it aims to function as a closer approximation to digital money in an otherwise transparent crypto ecosystem.
The token has experienced several boom and bust cycles, most notably during crypto bull markets when its privacy narrative gained traction. By the end of 2025, ZEC surged to nearly $700, significantly outperforming much of the market as investors shifted to smaller-cap assets with differentiated use cases.
This decision proved short-lived. Prices quickly retreated, falling more than 60% over the next few months as momentum faded and larger assets like bitcoin regained favor. The volatility highlights a recurring pattern for Zcash: a sharp rise during narrative-driven rallies, followed by sharp declines when that narrative loses urgency.
According to Grayscale, ZEC represents about 0.3% of the $1.6 trillion crypto “currency” segment, a share that Grayscale says reflects expectations that privacy remains marginal. If this view changes, even slightly, the benefits could be significant.
Grayscale pointed to the growing use of Zcash’s shielded transactions, which now account for the majority of activity, as evidence that demand for privacy already exists on-chain. But the company said the market continues to view privacy as an afterthought rather than an essential monetary feature.
This is part of a broader structural change. Just as digitalization and the internet reshaped debates over financial privacy in previous decades, Zhao argued that the transparency of AI and blockchain could trigger a third wave, where confidential transactions become more valuable.
In this scenario, Zcash’s design positions it as a direct analogue of cash, a property that the analyst says is increasingly rare in digital finance.
There are risks, however, the report warns. Regulatory treatment remains uncertain despite Zcash’s selective disclosure tools. Execution risk persists given the network’s reliance on complex upgrades and long-term concerns such as quantum computing that apply across all crypto, including ZEC, the report adds.
ZEC was trading up 5% over 24 hours, around $224.80, at press time.
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