Key Takeaways:
Zcash (ZEC) jumped more than 80% over the past six days to a new year-to-date high of $590, following the disclosure that Multicoin Capital has been building a significant position in the privacy-focused cryptocurrency since February.
“We believe that truly private, censorship and seizure resistant assets have clear product-market fit and demand is accelerating. We believe $ZEC is the cleanest way to express this thesis in public markets,” Tushar Jain, co-founder at Multicoin Capital, said in a post explaining the trade. The fund reportedly began accumulating its position when the token traded between $237 and $299.
The disclosure pushed ZEC from approximately $432 to a high of nearly $600 before settling, according to CoinGecko data. The move was backed by a surge in trading volume to over $1.2 billion in a 24-hour period, with the token’s market capitalization reaching between $6.29 billion and $8.7 billion. The rally comes as on-chain data shows a record 5.18 million ZEC, or 31% of the circulating supply, now sits in shielded pools, indicating a growing use of its core privacy features.
Jain’s thesis centers on the idea that as governments explore wealth taxes and increase financial surveillance, demand for assets that can resist both censorship and seizure will grow. This reframes Zcash not just as a tool for transactional privacy but as a strategic hedge for high-net-worth individuals and institutions. This view is gaining traction as institutional on-ramps improve. The Grayscale Zcash Trust offers regulated exposure, while a recent listing on Robinhood has opened access to more retail investors. Further, a $25 million funding round for the Zcash Open Development Lab (ZODL) from Paradigm and a16z aims to bolster wallet technology.
Zcash’s primary competitor, Monero (XMR), enforces privacy by default on all transactions. While this offers stronger anonymity, it has led to regulatory blowback and delistings from major exchanges like Binance and Kraken. Zcash, by contrast, makes its privacy features optional. This allows it to coexist with compliance frameworks while still offering robust, shielded transactions for users who opt in, a feature that appears more palatable to institutional capital.
Despite Monero’s stronger privacy guarantees, its market capitalization of approximately $7.6 billion currently trails Zcash’s valuation of roughly $9.0 billion, per CoinGecko data as of May 6.
The primary risk is that the rally is a short-term pump based on a single fund's disclosure, which could quickly reverse. The regulatory threat also remains significant. The U.S. Treasury’s 2022 sanctioning of privacy tool Tornado Cash serves as a precedent for potential action against privacy-enabling protocols.
Going forward, investors are watching for two key signals: whether other institutional funds publicly follow Multicoin’s lead, and the legislative progress of proposals like California's wealth tax bill. If the bill advances, it could provide a powerful real-world test for the seizure-resistance thesis. For now, the market has responded strongly to the idea that financial privacy is evolving from a niche ideology into a mainstream financial imperative.
This article is for informational purposes only and does not constitute investment advice.
