Zcash upside hinges on repricing financial privacy in an AI-driven world, Grayscale says

The crypto asset manager argued rising surveillance and AI could elevate demand for private digital money, positioning Zcash as a mispriced bet on confidentiality.

What to know:

• Grayscale said AI and onchain transparency could push privacy from niche to core financial feature.
• Zcash adoption metrics show real usage, even though its market share remains very small.
• The report framed ZEC as a high-risk asset with significant upside if privacy demand reprices.

Zcash (ZEC) is a wager that the rise of AI surveillance will make financial privacy more valuable, and the crypto market is underpricing that possibility, according to asset manager Grayscale.

"Zcash is nearly 10 years old but may be entering a new chapter. Use of its shielding technology is increasing, and new capital is entering the ecosystem to support wallet development and Zcash mining," analyst Michael Zhao wrote in a Friday report.

ZEC is a privacy-focused cryptocurrency that uses zero-knowledge proofs to hide transaction details, allowing users to shield the sender, receiver and amount, while still verifying transfers on a public blockchain.

Designed as a more confidential alternative to bitcoin BTC$67,736.34, the largest cryptocurrency, it aims to function as a closer approximation to digital cash in an otherwise transparent crypto ecosystem.

The token has seen multiple boom-and-bust cycles, most notably during crypto bull markets when its privacy narrative gained traction. In late 2025, ZEC surged to nearly $700, sharply outperforming much of the market as investors switched into smaller-cap assets with differentiated use cases.

The move proved short-lived. Prices retraced quickly, falling more than 60% in the following months as momentum faded and larger assets like bitcoin regained favor. The volatility underscores a recurring pattern for Zcash: sharp upside during narrative-driven rallies, followed by steep drawdowns when that narrative loses urgency.

ZEC makes up about 0.3% of the $1.6 trillion crypto “currencies” segment, according to Grayscale, a share it said reflects expectations that privacy stays marginal. If that view changes, even slightly, the upside could be significant.

Grayscale pointed to rising use of Zcash’s shielded transactions, now the majority of activity, as evidence that demand for privacy already exists onchain. But the firm said the market still treats privacy as an afterthought rather than a core monetary feature.

This is part of a broader structural shift. Just as digitization and the internet reshaped financial privacy debates in prior decades, Zhao argued AI and blockchain transparency could trigger a third wave, one where confidential transactions become more valuable.

In that scenario, Zcash’s design positions it as a direct analogue to cash, a property the analyst said is increasingly scarce in digital finance.

Still, there are risks, the report cautioned. Regulatory treatment remains uncertain despite Zcash’s selective disclosure tools. Execution risk persists given the network’s reliance on complex upgrades, and long-term concerns like quantum computing that apply across crypto, including ZEC, the report added.

ZEC was trading 5% higher over 24 hours, around $224.80, at publication time.

Read more: AI rout hits software stocks, but Grayscale says blockchains stand to benefit

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