ZCash Emerges As Q4 Outperformer While Bitcoin, Ethereum Lost Ground Amid Crypto Market Pullback

Grayscale said privacy-focused cryptocurrencies outperformed major tokens in Q4 as regulatory clarity improved and public blockchains moved closer to integration with the traditional financial system.

• Grayscale said regulatory progress is highlighting the need for blockchain privacy.
• It noted that Zcash benefited from rising adoption of its shielded transaction features.
• Several privacy-linked protocols posted gains despite broader market weakness.
• Bitcoin and Ethereum declined during the quarter, weighing on overall crypto returns.

While Bitcoin (BTC) and Ethereum (ETH) lost momentum in the final quarter of the year, privacy-focused digital assets delivered some of the strongest relative returns in crypto markets, led by Zcash (ZEC).

According to a report from Grayscale Research, privacy emerged as the dominant crypto investment theme in the fourth quarter (Q4), even as broader digital asset markets cooled and risk appetite softened.

Zcash continued to buck the broader market on Monday, rising 0.2% over the past 24 hours even as Bitcoin’s price slid 3.2% and Ethereum fell 3%. At $535, ZEC’s price is up nearly 800% for the year but still 83% below its record high of $3,191 seen nine years ago.

Stocktwits data showed retail sentiment for ZEC in ‘bullish’ territory, while sentiment around BTC and ETH remained ‘bearish.’ ZEC also drew ‘high’ chatter, compared with ‘normal’ levels for Bitcoin and ‘low’ levels for Ethereum.

Privacy Emerges As Key Crypto Theme

Grayscale said growing regulatory clarity has pushed privacy back into focus, particularly as public blockchains move closer to integration with the traditional financial system.

“Privacy is a normal part of the financial system,” Grayscale Research said in its 2026 outlook. “Almost everyone has an expectation that their paychecks, taxes, net worth, and spending habits will not be visible on a public ledger.”

Most blockchains, however, remain transparent by default. Grayscale argued that deeper institutional adoption will require a stronger privacy infrastructure, a shift that is becoming more evident as market structure legislation advances.

Zcash Leads Privacy Coin Outperformance

That backdrop helped drive outperformance among privacy-oriented tokens, with Zcash standing out in Q4, according to Grayscale. Zcash functions similarly to Bitcoin but includes optional privacy protections through “shielded” transactions and accounts.

Grayscale noted that shielded balances increased during 2025 as a share of Zcash’s total supply, signaling rising demand for privacy-preserving transactions. The token’s gains also narrowed the gap with Monero (XMR), which has historically been the largest privacy-focused cryptocurrency by market capitalization. Grayscale said Zcash’s recent performance has increasingly challenged Monero’s long-held dominance in the sector.

Other Privacy Tokens Also Post Strong Q4 Gains

Grayscale noted that several other privacy-linked projects also outperformed during the quarter. Monero continued to benefit from demand for stealth addresses and confidential transactions. Decred (DCR) advanced on interest in its governance model and CoinShuffle++ privacy feature.

The firm also noted that Dash (DASH) saw daily transactions more than double during Q4, supported by its optional PrivateSend functionality. Basic Attention Token (BAT) gained traction as the Brave Browser ecosystem surpassed 100 million monthly users, reinforcing demand for privacy-centric digital advertising.

Beldex (BDX) also posted gains after expanding its privacy-focused product suite and integrating with LayerZero to enable cross-chain interoperability.

The broader crypto market, meanwhile, pulled back in Q4. Grayscale noted that returns were negative across major digital asset segments, with Bitcoin and Ethereum retreating as investors reassessed valuations and near-term catalysts.

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