Grayscale says Zcash (ZEC) is being materially undervalued by the market, tying that view to the rising importance of financial privacy in an age of expanding AI surveillance. In its latest report, the asset manager argues that crypto markets still have not fully priced the value of privacy as blockchains remain transparent and AI systems become more embedded in monitoring infrastructure. Research analyst Michael Zhao said Zcash is entering a “new chapter,” with its zero-knowledge proof-based design giving it a stronger claim to digital cash than many other crypto assets.
Shielded usage and ecosystem funding are picking up
The report says Zcash, despite being close to a decade old, is now moving through a different stage of development. According to Grayscale, usage of Zcash’s shielding technology has been rising, while fresh capital has entered the ecosystem to support wallet development and mining infrastructure. That combination points to activity that goes beyond narrative alone.
Zcash uses zero-knowledge proofs to let users verify transactions on a public blockchain while keeping the sender, receiver, and transaction amount hidden. Grayscale’s view is that this structure makes ZEC a closer digital cash alternative than Bitcoin, especially in a crypto environment where transparency is often the default and confidentiality is scarce.
A 0.3% market share leaves room for repricing, Grayscale says
Grayscale’s data shows ZEC accounts for about 0.3% of the broader $1.6 trillion crypto sector. The report argues this reflects a market that still treats privacy as a niche demand rather than a core monetary feature. Zhao wrote that just as the internet reshaped debates around privacy, the combination of AI and blockchain transparency could trigger a “third wave” of privacy demand, leading to a sharp reassessment of private transactions.
The report also points to ZEC’s trading history. By late 2025, the token had climbed to nearly $700, outperforming the broader market as investors rotated into smaller assets with differentiated use cases. That rally later reversed, with ZEC falling more than 60% after momentum faded. Even so, Grayscale maintains that if market views on privacy shift, ZEC could see significant upside.
Regulation and execution remain the main overhangs
Grayscale also highlighted the risks. Regulatory uncertainty remains central for privacy-focused assets. Zcash offers selective disclosure tools that can support compliance in some cases, but government positions on privacy coins still vary widely across jurisdictions.
The firm also warned about execution risk tied to the network’s reliance on complex technical upgrades. Over a longer horizon, quantum computing was listed as a shared challenge for crypto assets, including ZEC. Grayscale’s thesis is clear in the report: Zcash is a high-conviction, high-risk bet on a future repricing of privacy.