Zcash climbs 19x as Grayscale backs privacy coin's Bitcoin challenge

ZEC climbed 19-fold in a year to near $790 as Grayscale Research argued the privacy coin's sub-1% share of Bitcoin's market cap leaves room for further upside.

"Zcash's privacy technology, quantum-resistance work, and cross-chain connectivity give it competitive advantages over Bitcoin," Zach Pandl, head of research at Grayscale, said in a note dated Aug. 27.

Grayscale's framework projects ZEC reaching $1,622 if it captures 2 percent of Bitcoin's market cap, and $8,100 at a 10 percent share. The first U.S. spot Zcash ETF (ZCSH) debuted on NYSE Arca on Aug. 25, recording $14.8 million in first-day volume. ZEC touched an eight-year high above $850 before retreating to $790, down 7 percent from the weekly peak.

The ETF conversion from Grayscale's nine-year-old Zcash Trust unlocks creation-redemption mechanisms that tighten price tracking to net asset value, potentially drawing institutional allocators who previously avoided the trust's steep discounts. Shielded transactions now account for roughly 90 percent of Zcash network activity, up from under 20 percent two years ago, according to on-chain data.

Grayscale's $8,100 Scenario Hinges on Bitcoin Market Share

Grayscale's research team contends Zcash remains significantly underpriced relative to its technological capabilities. Pandl emphasized the escalating need for financial confidentiality as AI-driven monitoring systems expand across the digital economy, describing Zcash's zero-knowledge proof technology as a mathematical rather than circumstantial privacy guarantee.

The company also highlighted Zcash's preparation against quantum computing threats and its "intents" infrastructure, which Pandl said eliminates the need for extensive merchant integration. He characterized Zcash as a "private asset hub with universal connectivity" accessible to both individual users and autonomous AI systems.

ZEC's market capitalization stands at $13.13 billion, less than 1 percent of Bitcoin's. The token has gained more than 350 percent year-to-date and roughly 70 percent in recent weeks alone.

Derivatives Overheating Triggers Risk Warnings

While retail capital flowed into ZEC around the ETF listing, on-chain analysts flagged critical overheating in the derivatives market. CryptoQuant's Zcash risk indicator has entered extreme territory, with analyst Maartun noting the coin "just ripped 70% in a matter of days," leaving him "more worried about Bitcoin than excited about Zcash."

Futures open interest dropped 12 percent to $1.65 billion in the 24 hours after the ETF's introduction, with declines on Binance, OKX, and Hyperliquid. However, $1.53 billion in borrowed funds remains locked in ZEC margin positions, representing more than 11 percent of the token's total market capitalization. In the four-hour timeframe, futures selling surged 101.68 percent.

Galaxy Digital's head of research, Alex Thorn, criticized market participants who decided to "pump ZEC because it's 'private bitcoin,'" noting that account-based blockchains are "privacy nightmares" by design and "substantially less private than UTXO-based chains like bitcoin."

ZCSH carries a 2.50 percent annual management fee, with all proceeds directed toward Zcash ecosystem development and marketing. The fund holds approximately $304 million in ZEC, custodied by Coinbase Custody International in transparent, auditable addresses.

The SEC reviewed the Grayscale Zcash Trust in January 2026 without taking enforcement action, clearing the path for the listing. At least 10 countries restrict or ban privacy coins on exchanges, creating a regulatory paradox as the U.S. moves in the opposite direction with the first spot privacy-coin ETF.

This article is for informational purposes only and does not constitute investment advice.