Privacy Coins Rally Amid Regulatory Concerns, But Analysts Question Longevity

Privacy coins have been on a tear, with some of the biggest assets in the category up double digits over the past month. Monero, the biggest and oldest privacy coin, this week notched a new high of nearly $798. Though it has since fallen to just under $650, the asset has rocketed by 42% over the past seven days, according to CoinGecko. Dash is up even more: it’s jumped over 135% to $89 over the same time frame and is currently the best performing digital asset this week, though it’s well short of its all-time high. But how long will it last? And is it just hype — or a genuine concern over privacy? Pump it, VC Zcash challenged Monero for the title of biggest privacy coin by market capitalisation after Silicon Valley hotshots started promoting the coin last year. Its rally started after investor and AngelList founder Naval Ravikant wrote on X that while “Bitcoin is insurance against fiat,” Zcash is “insurance against Bitcoin” — highlighting privacy concerns around the biggest public blockchain. Crypto entrepreneur Arthur Hayes also began promoting Zcash. He instructed his followers on how to store it and made bold predictions for where the coin’s price was going, though none came to pass. The Winklevoss Twins’ venture capital fund, Winklevoss Capital, even backed a Zcash treasury company, with Tyler Winklevoss claiming “Privacy’s become a rare, vanishing commodity.” After lying flat for years — it’s still well below its 2016 record of $3,192 — Zcash started rallying. Over the past year, it’s up over 670%. Regulatory concerns A regulatory crackdown may also be fuelling the rise of these coins, Laurens Fraussen, an analyst at research firm Kaiko, said. Last year, the Bank of England, European Central Bank, the Basel Committee, and other regulators imposed limits on how much digital asset exposure — particularly stablecoins — banks could have. Fraussen said that this “reignited concerns about centralised control in crypto markets, ironically, the very thing cryptocurrency was designed to circumvent,” leading investors to consider privacy coins. Unlike Bitcoin and most other cryptocurrencies, assets like Zcash and Monero enable users to send and receive money without exposing their wallet addresses. With regulators keeping a watchful eye over public blockchains, private alternatives have been seducing the crypto community more than before. How long left? Still, despite Monero continuing to surge this week, we may be seeing the end of the run, Fraussen added. “The fact that ZEC’s open interest has been cut in half since its November 15 peak, even while still elevated, suggests we may already be in the exhaustion phase for the narrative as a whole,” he said, adding that narrative “could absolutely be another flash in the pan like we’ve seen before.” Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.