The fourth quarter proved unusually strong for privacy-focused cryptocurrencies, with performance metrics now outpacing major market leaders such as BTC, ETH, and SOL. In early November, the privacy asset segment's total market capitalization reached more than $59.8 billion.

Privacy coins have seen a bull run in 2025, attracting investor attention as an alternative hedge against surveillance-based monetary systems, particularly amid growing global scrutiny of financial privacy and online data control. This advance coincides with intensified regulatory activity worldwide, echoing earlier cycles where Bitcoin continued to rise despite mounting legal and political pressure. BTC, as the flagship of the crypto market and the cryptocurrency that pioneered decentralization, has historically shown positive price movement even amid growing regulatory pressure. 

The leading digital asset has had a long journey — from bans to being traded on major financial platforms worldwide as part of various financial products. Since 2016, despite numerous incidents and market shocks, including major security breaches, exchange collapses, and mining industry scrutiny, Bitcoin's market cap grew from $6 billion in 2016 to $2 trillion in Q3 2025, a 337 times increase.

In the fourth quarter of 2025, privacy coins demonstrated similar behavior.

Historical Parallels With Bitcoin's Early Growth Phase

Despite delistings from major centralized exchanges and looming regulatory restrictions, ZCash, Monero, and Dash are performing remarkably well. ZCash trading volume has surged to more than $7 billion in November, up over 1,100% in the past three months.

This parallels Bitcoin, which has historically captured community attention and shown strong price performance in the lead-up to each halving. For comparison, ZCash and Monero gained 652% and 93% YTD, respectively, while BTC, ETH, and SOL are down 3%, 6%, and 28% over the same period.

This trend suggests the privacy sector may be entering a Bitcoin-style pre-cycle phase, where regulatory pressure becomes a catalyst rather than a barrier. The potential stems from the fact that privacy coins already have the infrastructure for global adoption and everyday use, including as an alternative to stablecoins for payments and settlements. As early as 2018, Dash, a major privacy-focused cryptocurrency, was widely used as a convenient payment method in Venezuela, Colombia, Brazil, and several other countries. This foundation suggests that in 2026–2027, the use of privacy-focused cryptocurrencies may continue to expand, driving further growth in their value and market capitalization.

Why ZCash Is Emerging as the Institutional Privacy Play

ZEC’s wider availability on centralized exchanges directly impacts liquidity: its daily trading volume is steadily above $1 billion, compared to over $140 million for Monero. ZEC’s liquidity is approximately 15 times higher on centralized markets, which is critical for large funds that must be able to enter and exit positions without significant slippage and market distortions.

ZCash’s privacy features make it more attractive to institutional investors and maintain its chances of listing even after 2027. Unlike Monero, which will likely remain unavailable on major regulated exchanges, ZCash offers flexibility, with optional privacy that can be activated when needed. This gives institutions room to maintain compliance and reporting, making ZEC a regulatory-acceptable asset, while XMR is considered toxic from an AML and KYC compliance perspective.

Furthermore, ZCash remains the only private asset for which Grayscale has created an institutional trust open to accredited investors. This provides a regulated way to gain exposure to the asset without directly owning it, something Monero cannot offer.

A Strategic Setup or Insider Signaling?

The timing is noteworthy.

ZEC's halving narrative, increased capital inflows, and structural liquidity advantages are aligning ahead of anticipated U.S. regulatory clarity in 2027. If future regulation explicitly permits selective privacy assets like ZEC while banning enforced-privacy cryptocurrencies like XMR, we may be witnessing early positioning from market participants who already expect this outcome.

At the same time, ZEC's more transparent emission model and the upcoming halving create an appealing window of opportunity for capital inflows. However, investors are still taking on significant risk, and there's a high probability that ZEC's current momentum will fade before full regulatory clarity is achieved.

The real question is whether insider trading might be involved. Perhaps the U.S. regulators' position on ZCash for 2027 is already known behind the scenes: a green light for ZEC and a red one for XMR.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.