Grayscale's ZEC Play: Wall Street Accumulates, Why Are Eastern OGs Pushing Back?

Author: Nancy, PANews

ZEC is staging a powerful one-sided rally. Shorts keep adding fuel to the upside, bullish voices overseas are rising one after another, and some even see it as the privacy version of Bitcoin.

Yet, amid soaring market sentiment, this multi-billion-dollar privacy narrative is being openly challenged by Eastern crypto OGs. So, is this ZEC rally a return of the privacy narrative, or a case of new whales defeating old whales?

ZEC's market cap breaks into the top ten, capturing over 60% of the privacy coin market

Riding this strong rally, ZEC has stormed back into the core narrative of the crypto market and once again become the focus of capital flows.

CoinGecko data shows that over the past 30 days, ZEC has risen 130.9%; over the past year, its gain has reached 2252.0%. ZEC's current market cap is approaching $20 billion, surpassing the veteran meme coin DOGE and entering the top ten cryptocurrencies by market cap globally. Compared with the same period, ZEC has clearly outperformed mainstream crypto assets such as Bitcoin and Ethereum.

As ZEC continues to climb, its market share has also overtaken the original privacy coin leader Monero (XMR). As of Sept. 9, ZEC's market cap accounted for more than 66.7% of the total privacy sector market cap, making it the core driver of this round of privacy narrative revival.

According to Glassnode analysis, among the major crypto sectors, privacy is the only sector whose market cap is higher than the October 2025 high, up 213% from then; over the past 30 days, the privacy sector also led the top ten sectors with a 90% gain. Meanwhile, the total market cap of privacy coins among the top 200 crypto assets has grown from $7.1 billion a year ago to $33.6 billion, approaching the size of Tron. Nearly half of that increase came in the past 30 days, with ZEC being the main source of growth.

Looking at privacy coin performance, over the past 90 days, DASH, XMR, and ZEN have all outperformed Bitcoin. Among the top 25 assets, only ZEC, HYPE, XMR, and WBT are above their Oct. 6 prices from last year, two of which are privacy coins. Even though the crypto market saw a relatively broad rebound over the past month, full-year returns remain concentrated in the privacy sector.

Not only has ZEC itself attracted capital, but its heat has also spilled over to ZCAT, a dividend meme coin related to ZEC. Driven by speculative capital, ZCAT recently surged rapidly, with its market cap breaking $170 million.

As ZEC rallied violently and kept hitting new stage highs, its liquidation amount once ranked first across the entire network, concentrated mainly in short positions. Some whales who shorted against the trend suffered heavy losses or even liquidation, providing fuel for ZEC's further rise. For example, Garrett Jin, the largest ZEC shorter on Hyperliquid, had added to his short position against the trend as prices kept rising. He has now reduced some of his position, but his unrealized loss is still close to $20 million.

Meanwhile, bullish sentiment toward ZEC in overseas markets is also heating up rapidly. Overseas crypto leaders including Balaji, Bitwise CIO Matt Hougan, Multicoin partner Tushar Jain, and well-known crypto KOL Ansem have all publicly expressed optimism about ZEC, with Balaji even calling a $100,000 price target.

Fundamentals questioned by Eastern OGs: Is ZEC's rise a case of new whales beating old whales?

As ZEC sparks a privacy narrative frenzy, some Eastern crypto OGs and KOLs are pouring cold water on it, questioning the fundamental support for this rally and offering rational analysis of its upward logic from different angles.

On Sept. 8, F2Pool co-founder Wang Chun tweeted that Zcash's recent rise is driven more by narrative than fundamentals. He argued that ZEC's entry into the top ten by market cap does not mean it has real application value comparable to Solana or Hyperliquid.

Wang Chun pointed out that Zcash was not fairly launched at the beginning. In the first four years, 20% of each block reward went to founders, employees, advisors, and early investors as a founder's reward, totaling about 2.1 million ZEC, or 10% of the 21 million total supply. After that distribution ended, a similar 20% block reward share was restored in the form of a development fund.

In addition, he believes that Zcash has long used privacy as its core selling point, but privacy addresses are not the default option, and a large amount of assets remain in transparent addresses. On governance, there have long been governance disputes among institutions such as Electric Coin Company and the Zcash Foundation, and the departure of the entire ECC team in January 2026 further exposed governance problems. On security, the serious Orchard pool vulnerability disclosed in May 2026 had existed for about four years and could theoretically be used to create untraceable fake ZEC. The Ironwood upgrade implemented in July closed the old privacy pool and required assets to pass through a gate. In his view, this was more of a security fix than a reason to support ZEC entering the top ten.

Cobo co-founder and CEO Discus Fish later posted a recollection, saying he has always had a deep psychological scar regarding ZEC. When ZEC's mainnet launched in 2016, BitMEX set its price ceiling at 10 BTC, a price that became ZEC's all-time high. Discus Fish said that on the night of the launch, shortly after mining began, the transformer at his GPU mining farm was struck by lightning, and ZEC has never appeared in his personal wallet since.

Waterdrop Capital CEO Jademont Zheng believes that after ZEC's recent rise, a large number of market participants have started turning bullish on ZEC, a scene that "looks exactly like the debate among BCH supporters back then about the real and fake big cake." He pointed out that in the end, BCH's Chinese supporters suffered heavy losses, and this time "the main characters have just been replaced by a bunch of foreigners."

However, Jademont Zheng also emphasized that he has always held ZEC and has been writing bullish articles on ZEC since last year. He believes that holding ZEC is more like buying an "insurance," and since it is insurance, one should not expect it to actually take effect, just as one would not hope to get a serious illness after buying critical illness insurance.

In the view of crypto KOL Lanhu, the controversy among crypto community OGs over ZEC has a long history, but "whether ZEC has a market maker and whether it can make money" are actually two different questions.

He believes that the core disagreement among Punks is not whether ZEC will rise, but that ZEC has taken a different path from BTC and Monero since its birth. BTC and Monero are closer to "ownerless, privacy by default, fair launch," while ZEC has always been accompanied by controversy. For example, ZEC had a 20% block reward as a founder's reward in the first four years; privacy is optional and provides a Viewing Key, which, while balancing compliance, also leaves a large amount of funds in transparent addresses for a long time; the project had obvious corporate and VC backgrounds in its early days, and although core teams such as ECC and the original governance system later changed, development did not stop because of that. In addition, Zcash's early privacy pool once had a window where it could not be cryptographically proven that "no one had minted coins secretly." The old pool was eventually closed, and the new pool restricts fund outflows through gates, but the window itself has not been retroactively disproven and cleared.

Lanhu believes these are more matters of stance than market conditions. As for making money, that is another set of logic. Hashrate concentration, hidden fund flows in privacy pools, the ZEC narrative of listed company treasuries, ETF and custody channels, and short squeezes can all become real variables driving the price.

In his view, an asset does not have to fully conform to the original crypto spirit to still become a trading target with good liquidity, a smooth narrative, and capital willing to keep passing the baton. Ideology and trading are not completely mutually exclusive. This is also reality: today's crypto market is no longer the original crypto market.

Crypto KOL 0xTodd objectively analyzed ZEC's upward logic from the perspective of market structure and capital flows. In his view, an important reason for ZEC's rise this time is that XMR adopts a mandatory privacy model and has been affected by delistings from exchanges such as Binance and Coinbase, while ZEC allows transparent and privacy addresses to coexist, so its liquidity and trading channels have not been restricted to the same extent. At the same time, with similar exchange support, compared with DASH, Grayscale under DCG also holds ZEC. He further pointed out that many black-market activities in reality do not particularly care about privacy coins and mostly use USDT on Tron and BTC; attackers who truly value privacy may prefer mixing tools such as Tornado Cash. The reason is that large-scale fund activities often occur in the EVM ecosystem, while privacy chains, apart from their privacy attributes, lack a comparable pool of funds and application scenarios.

Therefore, in 0xTodd's view, even if XMR and DASH pump again in the future, it cannot prove that ring signatures or mixing mechanisms have defeated zero-knowledge proofs. "It can only prove that a new whale has defeated the old whale."

Grayscale becomes a key driver: a decade-long layout from mining to ETFs

Grayscale is undoubtedly a key driver of ZEC's rally this time. But if we stretch the timeline, Grayscale's parent company DCG is not an outsider in the Zcash ecosystem; it began laying out its position many years ago.

In 2016, when Zcash's mainnet launched, the published list of early investors included DCG and its founder Barry Silbert. As an early shareholder of Electric Coin Company (ECC), DCG not only received equity but also received ZEC founder's rewards. The following year, Grayscale under DCG launched the Grayscale Zcash Trust, packaging ZEC into a financial product that institutional investors could participate in.

Since 2019, Fortitude Mining under DCG began participating in ZEC mining. This year, the mining company further advanced its merger with HeartSciences to list on Nasdaq and announced a $45 million investment to strengthen Zcash mining infrastructure. At the same time, Foundry Digital, DCG's mining and staking company, also launched an institutional-grade Zcash mining pool, currently accounting for about 14.2% of the network's hashrate.

The launch of ZEC spot ETFs has drawn even more attention to Grayscale. Last month, Grayscale's ZCSH was officially converted into the first U.S. ETF to directly track a privacy coin. Just two weeks after launch, its assets under management exceeded $500 million, and it currently holds more than 550,000 ZEC, with options trading further opened.

This means a lot to Grayscale. In the GBTC era, Grayscale's biggest advantage was its first-mover advantage, long occupying the compliant entry point for U.S. institutions to allocate Bitcoin. But as traditional financial giants such as BlackRock and Fidelity launched spot ETFs one after another, the Bitcoin ETF market has become highly homogenized, and it is difficult for Grayscale to replicate its early near-monopoly product advantage.

In contrast, the privacy coin ETF market is still relatively uncontested. For Grayscale, this is a market where it can keep telling stories and attract incremental capital. At the same time, ZCSH's management fee is as high as 2.5%, far higher than mainstream BTC and ETH spot ETFs. This means that if ZEC can continue to attract capital inflows, Grayscale will gain not only growth in assets under management but also a business with fees far higher than mainstream crypto ETFs and relatively limited competition. It is worth noting that Grayscale also withdrew its registration applications for three altcoin ETFs—ADA, HBAR, and DOT—in August this year, which the market speculated may indicate that Grayscale is concentrating more resources on higher-priority similar products such as ZEC.

More importantly, ZEC has a larger narrative space and is being repackaged as "Bitcoin with privacy features." The 21 million total supply, PoW consensus mechanism, and monetary attributes highly similar to Bitcoin give ZEC the foundation to move closer to the Bitcoin narrative; and against the backdrop of rising data surveillance and privacy needs in the AI era, the optional privacy mechanism adds new imaginative space for ZEC. At the same time, compared with other privacy coins, changes in the regulatory environment are also reducing ZEC's long-standing uncertainty. In January 2026, the SEC ended its investigation into the Zcash Foundation, which to some extent alleviated the market's previous concerns about regulatory risk.

Recently, Grayscale Research has also added fuel to the ZEC narrative. The institution published an article stating that Zcash, as a decentralized digital currency with privacy features similar to Bitcoin, is expected to pose a real challenge to Bitcoin's network effect. In Grayscale's view, Zcash has advantages that Bitcoin lacks, such as financial privacy, ongoing development to address network security risks including quantum computing, and cross-chain connectivity through intent technology. These features may become more important in an AI-driven surveillance era.

In addition, the continued rise in the size of shielded pools has further strengthened market expectations of ZEC supply contraction. As of Sept. 9, about 29% of ZEC has entered shielded pools, with Ironwood accounting for 23.2% of total supply, making it the largest shielded pool at present. As more and more ZEC enters shielded status, the chips truly available for free circulation and trading in the market are decreasing.

To some extent, for Grayscale, choosing ZEC is not simply betting on a rising altcoin, but betting on an asset with narrative space, compliance foundation, and productization potential, and an opportunity to be repriced by Wall Street.

Overall, the privacy narrative is only the spark; capital is the key force driving ZEC's repricing. But how far this rally can go ultimately depends on whether there will be sustained new capital and market consensus to take over.