Article Summary
- Analysis of the recent price surge of Zcash (ZEC) in the cryptocurrency market.
- Examination of the roles of increasing privacy demand and market speculation in this surge.
- Evaluation of on-chain data and market data to identify the primary drivers of growth.
- Discussion of Zcash's long-term prospects and its ability to sustain its value.
Introduction
Recently, the cryptocurrency market experienced a general correction. Amidst this backdrop, Zcash (ZEC) emerged as a standout performer. In a relatively short period of two months in the fall of 2025, ZEC surged by over 700%, making it a bright star in the crypto market. While Bitcoin and Ethereum investors were struggling through the chill of a 'bear market,' ZEC holders were basking in the mid-summer sun. This stark contrast has sparked a core question in the market: Is ZEC's price surge due to a genuine increase in privacy demand amid tightening global regulations, or is it merely a financial manipulation woven together by institutional and highly leveraged capital?
Data Duet: Privacy Demand vs. Capital Frenzy
So, was Zcash driven by real privacy demand or financial hype? To assess this, we must analyze a broad array of data related to Zcash.
On-Chain Privacy Demand Data
Shielded pool data is the most crucial metric for Zcash. This metric is akin to TVL (Total Value Locked) in other public blockchains, representing the amount of funds participating in privacy features on Zcash. The total shielded pool volume has seen significant growth in the past six months. On March 27, Zcash's total shielded assets were approximately 2.66 million ZEC. By September, this had grown to around 3.8 million ZEC, and on November 4, it surged to 4.98 million ZEC. This is nearly double the amount since March. Furthermore, the percentage of the total supply of ZEC held in the shielded pool has also increased significantly, rising from 18% in October to 23% on November 11, and then to 29.38% on November 17. As of November 17, of the 4.81 million ZEC shielded, 86% flowed into the Orchard pool (Zcash's most advanced protocol). The number of transactions has also seen significant growth since October. Prior to this, Zcash's weekly average transaction count was around 30,000 to 40,000 transactions. On October 2, this figure surged to 100,000 transactions. In the week of November 16, it reached 460,000 transactions, constantly setting new records since October. From the on-chain demand data, it appears that Zcash has indeed seen significant growth in privacy demand.
Market Data
On September 28, ZEC's total futures open interest was only $18.75 million. By October 12, this figure had grown to $360 million. Even accounting for the growth in futures open interest due to the price increasing by 4.5 times during this period, total holdings still increased by $270 million. By November 17, this figure had surged to $1.377 billion, setting a new record high. Simultaneously, the price of the ZEC token has soared, rising from $58 on September 28 to a high of $750, a maximum increase of approximately 12 times. Additionally, funding rates have seen a bizarre scene. On November 7, the highest funding rate for ZEC futures reached -0.4192%, indicating that the market was generally paying a significant premium to short ZEC. Short sentiment was extremely strong. The price that day rose by a maximum of 48%, setting a record high of $750. Short sellers paid a heavy price, with amounts held in short positions exceeding $51 million. From the perspective of liquidation distribution, the main short positions that day were concentrated on Hyperliquid, with short position liquidations on Hyperliquid alone contributing $33 million, nearly six-tenths of ZEC's total daily liquidation amount.
Began with Real Demand, Ended with Emotional Speculation
Overall, both the on-chain demand and the market price of Zcash have seen significant surges during this period. But behind this data, was demand the driver, or did the price drive demand? From the perspective of price analysis, the ZEC token price bottomed out at $34 on August 20 prior to this surge. It then slowly climbed over a 40-day period, increasing by 106%, with the price reaching $71 on September 29. We have reason to believe that this stage was the initial phase of ZEC's launch. Prior to this, in the on-chain data, we can see that ZEC in the shielded pool began to rise on August 6, from 3.22 million on August 6 to 3.63 million on August 20, an increase of 12.7%. Although the ZEC token was in a downtrend during this stage, shielded pool data showed that demand for privacy-focused cryptocurrencies was still growing. By September 29, although the price had increased by 1x, the number of ZEC in the shielded pool had only grown to around 3.8 million, and did not expand simultaneously with the price surge. This discrepancy reveals that Zcash was initially indeed driven by genuine market demand, but it appears to have decoupled from the original demand logic after entering a period of token price frenzy. Another dataset reflects this situation from the side. As shown in the figure below, the green curve is the proportion of privacy transactions in the Zcash network. This figure also continued to rise consecutively before August 24. As the price soared, the proportion of privacy transactions began to decline, although the average total number of transactions per day in the same period was still rising significantly. The proportion of transparent pool transactions (which can be regarded as on-chain transaction demand, not privacy demand) was higher. From this perspective, the ZEC price surge was indeed driven by demand in the first half, while the frenzied surge in the second half was entirely driven by market sentiment.
Long-Term Narrative Good, Short-Term Fuel Exhausted
However, after the frenzy, the market may need to know whether this demand-driven expectation is a long-term narrative or just promotional material exploited by capital. Firstly, in terms of fundamentals, the demand for privacy is growing alongside the recent implementation of the EU's MiCA law and the advancement of stricter KYC/transaction monitoring rules globally. A16z's 2025 State of Crypto reports revealed that Google search interest in privacy-related terms has surged sharply in recent months. In this context, ZEC's "optional privacy" feature (i.e., the existence of transparent and shielded addresses side by side) and its compliant "view key" design makes it a more attractive option for compliant institutions than hardcore privacy-focused cryptocurrencies like Monero (XMR). Well-known investor Naval Ravikant (author of "The Almanack of Naval Ravikant") even directly promoted Zcash as 'insurance on Bitcoin', further stirring market enthusiasm for privacy-focused cryptocurrencies. In addition, timing was also an important prerequisite for the surge in the ZEC token. Throughout October, the cryptocurrency market slipped into a round of declines, with the majority of tokens, including Bitcoin, retreating significantly. Narratives of other market tracks seemed to have lost their effectiveness, and people needed a target that could be bet on in the short term and realize profits. Privacy-focused cryptocurrencies turned out to be the best theme at this stage. Overall, the surge in Zcash or privacy-focused cryptocurrencies in general in recent days is the result of multiple factors. In this process, genuine demand was certainly the initial driver of the surge, while the frenzied speculation of market funds became the main fuel behind this surge, especially those investors who were shorting under increasing pressure. However, when this round of excitement begins to fade, will the demand narrative of privacy-focused cryptocurrencies and Zcash still be effective in the long term? It seems to be the case at present. However, considering Zcash's current shielded pool amount of approximately $2.8 billion, it is not prominent compared to the TVL of other public blockchains, and similarly, the tens of thousands of daily transactions in the private pool are not considered active. Therefore, at present, there is demand for ZEC, but price support relies more on sentiment than demand.
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