Investors Seek Countercyclical Value in Privacy Coins
– By Carter Feldman, CEO and Founder, Psy Protocol
Sustained pressure from a falling Bitcoin price acts not only as a system-wide depressant, but also as a catalyst for efficiency, forcing miners and investors to seek value in specialized plays. The bear market makes this a prime time for ZK proof-of-work privacy coins, whose security and logarithmic scalability are now more important than ever for miners and private agent internet transactions.
When the price of bitcoin stagnates, miners’ margins contract. This economic reality requires miners to become more astute in allocating capital, moving hashing power to more profitable, specialized chains. This is a calculated move toward protocols that not only reward raw energy expenditure, but also provide the utility the market desires.
This is where privacy coins come in. As the broader market consolidated, there was a surge in privacy coins led by Zcash. encrypted electronic currency used for everyday private payments. With price increases of up to 950% from September lows, it has significantly outperformed the general market performance. This resurgence is a sign that retail and institutional players recognize privacy as a missing piece in the maturing crypto ecosystem.
Adoption measurements confirm this. Zcash’s protected pool (i.e. tokens held in private addresses) recently reached its highest level ever at over 4.5 million tokens, signaling growing user demand for true financial autonomy. The market does not just speculate; it’s about functionally requiring a system that provides accountability without sacrificing privacy.
The technology behind this privacy, known as zero-knowledge (ZK) proofs, is the real long-term institutional appeal, reaching far beyond the crypto world. ZK is basically a computer tool that allows a party to prove a statement to be true without revealing the underlying data.
This functionality is rapidly evolving into real-world applications where data protection is paramount:
- Decentralized identity: Prove that you are over 18 without revealing your date of birth or your name, crucial for regulatory compliance (GDPR, etc.).
- Supply chain: Verify the ethical sourcing or origin of a product without revealing sensitive contracts or business relationships with suppliers.
- Secure voting: Allow participants to prove their eligibility to vote without revealing their identity or voting choice.
In this context, ZK’s native protocols simply adapt this universal technology to the most difficult and highest-stakes computing problem: Internet-scale financial transactions. By performing client-side transaction verification, ZK can scale while maintaining the privacy that is becoming the global standard for data security across all industries. This dual utility explains why ZK’s native assets are a wise long-term investment; they rely on technology that is quickly becoming mandatory, not just optional, for the world’s digital infrastructure.
As the market worried about bitcoin’s price fluctuations, smart investors recognized that privacy coins were meeting real market demand.
Headlines of the week
– By Francisco Rodrigues
This week, we see major risk exposure for the world’s largest Bitcoin holding company, Strategy, and the decentralized finance ecosystem if regulatory hurdles increase.
Checking the ambiance
Smooth the Ride, Part II: ETH’s whirlwind year was not for the faint of heart.
– By Andy Baehr, CFA, Head of Product and Research, CoinDesk Indices
A few weeks ago, we showed how a trend overlay on Bitcoin helped save 2025 returns. Our Bitcoin Trend Indicator (BTI) signaled a “significant downtrend” coming into mid-October, allowing strategies to pull back and preserve capital. For advisors and institutions building long-term crypto allocations, we’ve noted that trend-based strategies can help “smooth the ride” and keep people in the game.
In last week’s Crypto Long & Short, we reiterated the view that there cannot be a broad rally in digital asset classes without ETH’s participation, if not leadership. Like it or not, Ethereum is the standard bearer for blockchain adoption stories. In the eyes of many, it is not an “altcoin”. When ETH rallies, it signals that something bigger is brewing: that stablecoins, DeFi, and tokenization are gaining prominence in the global consciousness. We noted that Fusaka’s upgrade is an embodiment of the type of progress, focus and, yes, messaging that will foster even greater mindshare.
Yet ETH has been in very short supply in 2025, making conviction – and sizing – a challenge.
The arguments in favor of the Ether trend
This brings us to a natural question: how does our ETH trend strategy work? We launched the Ether Trend Indicator (ETI) alongside BTI in March 2023, using the same quartet of moving average crossover signals. We tested these signals on both assets, liked what we saw, and haven’t needed to change them since.
ETH price is color coded by the Ether trend indicator (greens are uptrend, yellow neutral, reds are downtrend)
Source: CoinDesk Indices
If you think about why time series momentum should work – new information incentivizes different segments of the market over time – then ETH seems like a good candidate. Hedge funds and crypto-native derivatives traders are more likely to start a trend. ETF flows are more likely to follow.
ETH experienced three significant phases in 2025: a breakdown in the first quarter, a powerful rally in the second and third quarters, and the heartbreaking pullback of the fourth quarter. We applied a systematic trend strategy (in effect since October 2023) following ETI to ETH and the results are surprising.
The ETH Trend Strategy (in effect since October 2023) helped ease the transition
Source: CoinDesk Indices. “ETIS1” strategy. Methodology here. Hypothetical results ignoring transaction costs. Past performance does not guarantee future results.
ETI showed that ETH was in a downtrend for 5 days and in a significant downtrend for the previous 29 days. For a market numb to bear calls, it may be best to follow the signals and wait for the trend to reverse.
Chart of the week
ETH DAT flow versus ETH price
In this week’s COTW, we look at Ethereum Digital Asset Treasury (DAT) flows and the price of ETH, revealing a clear correlation: the trend of DAT flows appears to be a primary price driver. Before October 2025, the increase in DAT flows strongly corresponded to the rise in ETH prices. Since the ETH price peaked around October 2025, flows and price have been on a downward trend. Given that these DATs hold approximately 3.5% of the circulating ETH supply, the current lack of upward momentum in these flows suggests that a new and clear upward trend in DAT accumulation is likely a prerequisite for the next major upward price movement.
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