20x in 3 months: Does ZEC's "Bitcoin Silver" narrative hold up?

The pursuit of privacy by crypto punks can be traced back to the birth of Bitcoin 16 years ago, which embedded privacy mechanisms into a fully transparent ledger, thus launching the entire world of cryptocurrencies. To this day, privacy remains a key topic in the crypto space.

If you bought and held ZEC from the first time this cycle’s “Version Child” Mert called it out, you would have achieved a rare 20x return among altcoins this year in less than three months.

When ZEC soared from $238 to $580 in 40 days, achieving a 20x increase in three months and reaching a seven-year high, the crypto market realized that a long-forgotten sector was making a strong comeback. The entire privacy coin sector surged by about 80% over the past seven days, with veteran projects like DASH, DCR, and ZEN rising by more than 100%.

Even more surprising was the shift in market sentiment. Just a few months ago, privacy coins were labeled as “regulatory orphans,” with Kraken delisting XMR and the EU’s 2027 ban proposal causing investors to shy away. But now, “privacy is a necessity, not a feature” has become a high-frequency topic on Twitter, Arthur Hayes publicly called for “ZEC to $10,000,” and Vitalik has repeatedly endorsed ZKsync.

What is the real driving force behind this rally? Is it a demand for hedging under regulatory pressure, or is it purely capital speculation? More importantly, how long can this heat last?

Who are the leaders of the rally?

ZEC is undoubtedly the absolute leader of this round. Starting from $237.84 on October 23 to reaching $532.06 on November 7, it rose by 120% in 40 days, with a cumulative annual increase of 700%. This price not only set a new high since 2018 but also brought ZEC back into the mainstream investors’ view.

Looking back at several key time points, the trajectory of ZEC’s rise is clear:

October 1: Grayscale announced the reopening of the ZEC Trust (ZCSH), offering fee waivers and staking functions. ZEC surged 22% that day;

October 24: A “flag breakout” appeared in the technical pattern, with on-chain indicators OBV and CMF rising in sync, resulting in a 40% increase in four days;

November 1: Futures open interest (OI) broke through $770 million for the first time, Arthur Hayes again called for a “target of $10,000,” triggering a short squeeze and a 15% daily increase;

November 7: The price broke through $532, with 24-hour spot trading volume reaching $1.75 billion, 1.4 times the monthly average;

More noteworthy is the improvement in fundamentals: ZEC’s shielded pool balance surpassed 5 million coins for the first time, accounting for about 30% of circulation, equivalent to $2.5 billion choosing fully anonymous storage. Daily transaction volume rose from 10,000 to 12,600, with the proportion of shielded transactions jumping from less than 10% to 25-30%. These figures show that ZEC’s rise is not purely speculative, but supported by real privacy demand.

ZEC’s strong performance ignited the entire privacy sector, with a batch of once-forgotten veteran projects also erupting:

There are two key drivers behind this collective surge:

First is the concentrated listing of new products by exchanges. From November 2-6, Binance, OKX, and Bitget successively launched perpetual contracts or new spot pairs for DASH, ZEN, and SCRT, bringing not only increased liquidity but also the amplifying effect of high-leverage derivatives. For example, DASH’s 24-hour spot plus contract trading volume exceeded $1.2 billion, a 2.8x increase from before.

Second is substantial progress in technology or protocols. On November 2, DASH became a native asset of Maya Protocol, enabling cross-chain anonymous swaps; ZEN completed its migration to Base L2, doubling zk-SNARK efficiency; SCRT and ROSE benefited from the new narrative of privacy computing combined with AI.

In addition, there is a special player in the privacy sector: ZKsync (ZK).

From a technical standpoint, ZK is an Ethereum Layer-2 scaling solution, with transactions on the main chain still transparent; but due to its optional ZK privacy features and Prividium enterprise private chain, mainstream platforms like CoinGecko and Santiment classify it as part of the privacy sector.

In the past seven days, ZK rose by over 130%, becoming one of the top gainers in the privacy track. This performance was driven by three catalysts:

Atlas upgrade’s performance leap: The full activation of the Atlas upgrade on November 1 increased theoretical TPS from 2,000 to 15,000-30,000, reduced ZK finality from 3 hours to 1 second, and lowered per-transaction fees from $0.0013 to below $0.0001. Previously, ZK’s biggest limitation was its higher cost compared to OP, but the Atlas upgrade has greatly improved this issue.

Tokenomics restructuring: The “ZKnomics Part I” proposal announced on November 4 for the first time redirected network transaction fees and enterprise authorization fees back to the Treasury for “buyback-burn + staking dividends,” transforming ZK from a pure governance token to a cash flow asset. Estimated staking APY could reach 8-12%.

Vitalik’s public endorsement: On November 1, Vitalik posted two tweets saying ZKsync is “undervalued,” causing ZK’s trading volume to surge 30x that day. Endorsements from key figures played a crucial catalytic role in market sentiment.

What is the logic behind the privacy narrative rally?

“Safe Haven Premium” under Regulation

On the surface, tighter regulation should suppress privacy coins, but in reality, it is precisely regulatory pressure that has stimulated privacy demand.

Policy tightening is accelerating. The EU’s Anti-Money Laundering Regulation (AMLR) draft clearly proposes to completely restrict privacy coin transactions within the EU by 2027; the US Financial Crimes Enforcement Network (FinCEN) also plans to increase scrutiny of “high-risk self-custody addresses.” With Bitcoin and Ethereum spot ETFs entering the regulatory spotlight, all on-chain transactions face stricter tracking.

As compliant assets become increasingly transparent, privacy assets become scarce.

Thus, European and American media have even named this round “Crypto Anti-Surveillance Wave.” ZEC and XMR are redefined as “the last line of defense for on-chain anonymity.” The consensus on social media is even more direct: “Privacy is not a feature, but a basic right.”

On-chain data confirms the growth in real demand.

ZEC’s shielded pool balance grew from 4 million to 4.9 million in 40 days, an increase of 25%; the proportion of shielded transactions jumped from less than 10% to 25-30%, meaning more and more users are choosing fully anonymous transactions. The more users there are, the stronger the privacy guarantee and the more obvious the network effect.

The increase in on-chain activity for ZEC, DASH, and ROSE is also strong evidence. ZEC’s daily transaction volume grew from about 10,000 on October 1 to 12,600 on November 7, an increase of 26%. DASH’s 30-day average daily on-chain transactions increased by 15%, from about 1,300 to 1,500; ROSE surged 200%, from about 3,300 to 10,000.

ZK’s TVL rebound is also noteworthy. After the Atlas upgrade was activated, ZKsync Era’s TVL rebounded from $500 million to $600 million, a 20% increase, which is a counter-trend growth against the backdrop of declining TVL across the entire Layer-2 ecosystem.

Exchange inflow data also reflects the trend of token lock-up. ZEC’s net inflow to exchanges dropped sharply from $41.8 million to $3.66 million within 48 hours, a decrease of 91%. This indicates that holders are not short-term speculators, but are optimistic about the long-term growth of privacy demand.

The Grayscale Effect for ZEC

The return of institutional funds is one of the most important catalysts for this rally.

The restart of Grayscale’s Grayscale ZEC Trust was the most significant event in October. On October 1, Grayscale announced the reopening of new subscriptions for the ZCSH Trust, offering two major upgrades: first, waiving management fees, and second, adding a staking function with an annualized yield of 4-5%. This combination greatly improved the risk-reward ratio.

Why is the word “Grayscale” so valuable? Because over the past decade, Grayscale has been almost the only compliant bridge and price indicator for traditional institutions to allocate crypto assets. Its US-issued trusts have long provided crypto exposure for pensions, family offices, and hedge funds, making it a leading indicator of institutional entry scale and preference changes.

Since launching the first Bitcoin trust in 2013, Grayscale has successively established more than a dozen single-asset trusts for ETH, SOL, LTC, BCH, ETC, FIL, XLM, and others. Many of these assets have experienced the typical “Grayscale effect”—capital inflows driving price increases, premium expansion, and consensus narratives. The ZEC Trust (ZCSH) was established as early as 2017 and also experienced a phase of premium surge during the 2020-2021 bull market, becoming a major institutional allocation target in the privacy sector.

However, as regulation tightened and privacy coins faced compliance pressure, ZCSH suspended subscriptions in 2022 and entered a dormant period in 2023. This restart means Grayscale is once again endorsing privacy assets, and the signal is even more significant than the capital itself.

Data shows that ZCSH’s AUM (assets under management) soared by 228% in one month, from about $42 million to $136 million, accounting for about 1.9% of ZEC’s circulating supply. For an asset with daily trading volumes of hundreds of millions of dollars, nearly 2% of the tokens being locked in the trust long-term has a significant supply-side tightening effect.

The deeper logic is the indirect effect of ETFs. The approval of Bitcoin and Ethereum spot ETFs has brought these assets into a strict regulatory framework, with every transaction traceable. Some institutions and high-net-worth individuals, seeking to avoid such transparency, have begun shifting funds to anonymous assets. Grayscale’s ZEC Trust provides a compliant channel—offering exposure to privacy coins while operating through traditional financial channels.

The Common Positions of the Crypto “Version Children”

Social media has played the role of an amplifier in this rally.

During ZEC’s rise, Mert (@0xMert_), regarded as this round’s Solana ecosystem “Version Child,” was undoubtedly one of the most critical voices behind the price. As CEO of Solana’s core infrastructure Helius and one of the most recognized voices in the Solana ecosystem, Mert began heavily recommending ZEC at $30 and has continued to promote it daily on X, livestreams, and podcasts. As a result, the ZEC and Solana communities now have significant overlap.

Even more catalytic was Arthur Hayes’ continuous entry and calls. The BitMEX co-founder was one of the best “cycle turn predictors” of the last bull market. On October 31, he first set a “ZEC target of $1,000,” which was already astonishing; then on November 1, he directly raised it to a “target of $10,000,” positioning ZEC as “the safe haven asset of the crypto market.” This tweet received over 200,000 interactions in a single day, causing ZEC’s trading volume to soar and a 15% short-term price spike.

Subsequently, Naval Ravikant’s comments elevated ZEC’s narrative from a “speculative asset” to a “battle of values and technological paths.” Naval redefined the value foundation of privacy assets with the phrase, “Privacy is a basic right, not a criminal tool.”

As the “biggest ZK enthusiast,” Vitalik posted continuously on November 1, saying ZKsync is “undervalued,” directly driving a 30x surge in ZK-related asset trading volume and fueling the ZK track. “ZK Season is here” also became a hot topic.

Is ZEC really the “Silver to Bitcoin’s Gold”?

Amid ZEC’s price surge, the community has put forward the narrative of “Bitcoin’s Silver.” Does this positioning really hold up?

Optimists believe ZEC’s rise is not just due to the privacy narrative. A key piece of evidence is the divergence in market performance: if ZEC’s rise were solely due to privacy demand, then RAIL, as the core privacy project of the EVM ecosystem, should have benefited simultaneously.

RAIL is a privacy protocol on the Ethereum ecosystem, capable of anonymizing ETH, ERC-20 tokens, and NFTs. More importantly, Vitalik himself not only used RAIL to anonymize millions of dollars in ETH, but also natively integrated RAIL into his new project Kohaku (a wallet SDK), with MetaMask and OKX Wallet as partners. Fundamentally, RAIL charges a 0.25% fee for funds entering and exiting the privacy pool, and 77% of the token supply is staked and locked for 30 days, making the actual circulating supply much lower than the surface data. This is a project with a clear business model and tokenomics, not just a speculative target.

But by mid-to-late October, a key market signal appeared: ZEC continued to soar while RAIL began to stagnate. This may indicate that ZEC’s rise is not just about privacy, but the market is repricing its monetary attributes and value storage function. In other words, privacy may just be the catalyst, and the real narrative is “Can ZEC become the silver to Bitcoin’s gold”—a narrative with a much higher ceiling.

Optimists believe ZEC has all the elements to become “Bitcoin’s Silver.” Technically, ZEC uses a proof-of-work (POW) mechanism, just like Bitcoin, relying on computational power competition to secure the network, which aligns more with the principle of “monetary neutrality” than proof-of-stake (POS)—no one can control the network by simply holding coins. ZEC’s total supply is capped at 21 million, a hard cap supply mechanism that is a core feature of value storage assets, avoiding the risk of inflation dilution. More crucially, ZEC’s privacy feature is not a burden but an advantage: in a world of tightening regulation and fully transparent on-chain transactions, privacy is shifting from an “optional feature” to a “monetary necessity.” When every Bitcoin transaction can be tracked and every address labeled, ZEC’s shielded transactions provide true fungibility—one of the most basic attributes of money.

From a valuation perspective, optimists also point out that ZEC’s market cap is still extremely low compared to Bitcoin, implying huge revaluation potential. If ZEC is truly accepted by the market as a value storage asset, even capturing just 5-10% of Bitcoin’s share would mean several times upside. Historically, the value ratio of silver to gold has fluctuated between 1:50 and 1:80; using the same logic, there is still a huge valuation gap for ZEC relative to Bitcoin to be bridged.

Pessimists, however, offer a completely different perspective.

They argue that if ZEC’s value really lies in “currency/value storage,” then the real challenger to Bitcoin is Ethereum, not ZEC.

Ethereum not only has smart contracts, a vast DeFi ecosystem, and institutional recognition, but more importantly, it already plays the role of “programmable money”—tens of billions of dollars in stablecoins circulate on Ethereum, and hundreds of billions of dollars are locked in Ethereum’s DeFi protocols. In comparison, ZEC, despite its privacy and fixed supply, lacks ecosystem depth and application scenarios, making it more like a “single-function tool” rather than an “all-purpose currency.”

Within this framework, pessimists are more optimistic about projects like Railgun. RAIL, by enhancing Ethereum’s privacy, is actually improving ETH’s monetary attributes. This means RAIL not only benefits from the privacy narrative but also from Ethereum’s monetary narrative—it stands on a larger, more mature ecosystem rather than trying to build a new monetary system from scratch.

 

From a valuation perspective, the upside potential for the two is vastly different. If RAIL rises 20x, its fully diluted valuation (FDV) will reach $4 billion, which is basically in line with other top projects in the Ethereum ecosystem and is easy for the market to understand and accept. But if ZEC rises 20x, its FDV will reach $160 billion, making it the third largest crypto asset by market cap, second only to Bitcoin and Ethereum. This requires the market to believe that ZEC can truly stand alongside Bitcoin and Ethereum—a very high bar.

This is not a question that can be answered by theoretical debate, but one that needs to be answered by the market’s actual actions: In the next 12-24 months, can ZEC’s shielded pool balance continue to grow? Will institutions allocate ZEC through compliant channels like Grayscale? Will regulatory pressure crush ZEC or instead strengthen its scarcity?

The answers to these questions will determine whether the “Bitcoin’s Silver” narrative for ZEC can stand, and will also determine the sustainability and depth of this privacy coin rally.