Zcash upside hinges on repricing financial privacy in an AI-driven world, Grayscale says

Asset manager Grayscale believes that Zcash (ZEC) is currently undervalued by the crypto market, positioning it as a strategic bet on the increasing importance of financial privacy. The firm suggests that the rise of AI-driven surveillance could significantly elevate the demand for private digital money, making Zcash's confidentiality features more valuable.

Zcash's Value Proposition

In a report, Grayscale analyst Michael Zhao highlighted that Zcash, despite being nearly a decade old, may be entering a new phase of growth. He noted an increase in the adoption of its shielding technology and a influx of new capital into the ecosystem to support wallet development and mining operations. Zcash is a privacy-focused cryptocurrency that utilizes zero-knowledge proofs to obscure transaction details, including sender, receiver, and amount, while still allowing for verification on a public blockchain. It is designed to offer a more confidential alternative to Bitcoin (BTC), aiming to function as a closer approximation of digital cash in the crypto space.

Historical Performance and Market Perception

The ZEC token has experienced significant price fluctuations, with notable surges during crypto bull markets when its privacy narrative gained traction. For instance, in late 2025, ZEC saw a substantial rise, outperforming many other assets as investors favored smaller-cap cryptocurrencies with distinct use cases. However, this rally was short-lived, with prices declining sharply in subsequent months as market momentum shifted back to larger assets like Bitcoin. This pattern underscores Zcash's history of sharp gains during narrative-driven rallies, followed by significant pullbacks when the narrative loses urgency.

Market Share and Future Potential

Grayscale estimates that ZEC constitutes approximately 0.3% of the $1.6 trillion cryptocurrency market. The firm suggests this share reflects a market expectation that privacy will remain a marginal feature. However, Grayscale argues that if this perception shifts, even slightly, the potential upside for Zcash could be substantial. The firm pointed to the increasing use of Zcash's shielded transactions, which now represent the majority of its on-chain activity, as evidence of existing demand for privacy. Despite this, the market is seen as treating privacy as an afterthought rather than a fundamental monetary characteristic.

Broader Trends and Risks

Zhao posits that a broader structural shift is underway, similar to how digitization and the internet reshaped financial privacy debates. He argues that the convergence of AI and blockchain transparency could usher in a new era where confidential transactions become increasingly valuable. In this context, Zcash's design is seen as a direct analogue to cash, a property that is becoming increasingly scarce in digital finance. Nevertheless, the report acknowledges risks, including regulatory uncertainty surrounding Zcash's selective disclosure tools, execution risks tied to complex network upgrades, and long-term concerns such as quantum computing, which affect the entire crypto market, including ZEC.

Current Market Status

At the time of publication, ZEC was trading approximately 5% higher over the preceding 24 hours, at around $224.80.