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Privacy Coins in 2025–26: Why Zcash (ZEC) Is Ripping, How It Compares to Monero (XMR), and What Comes Next

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Content
  1. Executive summary
  2. 1) The privacy-coin landscape: what problem is being solved?
  3. 2) The 2025 ZEC rally: what changed “now”?
  4. 2.1 A visible narrative: “privacy rotation” in Uptober
  5. 2.2 Zcash-specific catalysts: roadmap + wallet UX
  6. 2.3 Market microstructure: squeezes and funding
  7. 3) Technology 101—why ZEC and XMR feel so different
  8. 4) Policy & listings: the gravity you can’t ignore
  9. 5) What actually drove ZEC “up now” (the composite view)
  10. 6) Trading ZEC/XMR in 2025–26 without getting wrecked
  11. 7) Use-case snapshot: who actually needs private payments?
  12. 8) The regulatory scoreboard (2025–26)
  13. 9) Outlook: what could sustain (or end) the ZEC uptrend?
  14. 10) Quick “cheat sheets” you can reuse
  15. 11) For newcomers: a plain-English primer on the tech
  16. 12) A realistic playbook (if you decide to trade this sector)
  17. 13) Frequently asked questions
  18. 14) Bottom line (and how to act without donating edge)
  19. Sources & further reading

Long read (research-heavy). Bookmark it and share with your team.

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Executive summary

  • Privacy tokens are back in focus. In October 2025, Zcash (ZEC) posted a parabolic monthly run—variously reported at ~340–520%—making it one of the best-performing large-cap tokens over that period. Analysts cited a privacy-narrative rotation and ZEC-specific catalysts (roadmap progress and wallet upgrades) as drivers. The Cryptonomist+2Cointelegraph+2

  • Why “right now” for ZEC? A confluence of factors: (1) sector rotation into privacy assets, (2) visible roadmap and wallet work by Electric Coin Company (ECC), including Zashi updates and NU7-related engineering, and (3) derivatives dynamics—crowded shorts, rising volumes, negative/volatile funding—amplifying moves. coindesk.com+5coindesk.com+5Electric Coin Company+5

  • Zcash vs Monero in 2025: ZEC’s optional privacy (transparent or shielded transfers via zk-SNARKs) is often seen as easier to thread through compliance regimes; Monero’s default privacy (ring signatures, stealth addresses, RingCT) delivers strong anonymity but has faced heavier exchange delistings since 2024. Both remain technically robust—just optimized for different trade-offs. Coinspeaker+4Z.Cash+4zcash.readthedocs.io+4

  • Regulatory context matters. The EU’s MiCA framework fully applied to CASPs by Dec 30, 2024, and continues shaping exchange behavior in 2025; “privacy” is not banned, but listing policies and AML/Travel Rule workflows push venues to favor assets they can support operationally—one reason the market distinguishes ZEC’s optional transparency from XMR’s default privacy. esma.europa.eu+1

Below we go deep: tech differences (zk-SNARKs vs RingCT), the specific 2025 ZEC catalysts, market microstructure (short squeezes, funding), regulatory currents, and practical trading considerations.

1) The privacy-coin landscape: what problem is being solved?

Money is metadata-rich by default in public ledgers. If you publish every sender, receiver, and amount forever, markets get powerful analytics—but individuals and businesses inherit unwanted exposure. Privacy coins exist to let users prove validity of transactions without revealing sensitive details.

  • Zcash: pioneered practical zk-SNARKs—succinct zero-knowledge proofs—so a node can validate a fully encrypted (“shielded”) transaction meets consensus rules; since NU5 (May 2022) it uses Halo 2 in the Orchard pool. Zcash also supports transparent transactions, Bitcoin-style, which some compliance teams prefer to see at the edge. Z.Cash

  • Monero: mandates privacy by default using ring signatures (hide the true signer among decoys), stealth addresses (one-time addresses for recipients), and Ring Confidential Transactions (RingCT) (hide amounts). All Monero transfers have these protections turned on. getmonero.org, The Monero Project

Design choice = policy friction. In practice, venues and custodians have easier AML workflows with assets that can be sent/received on transparent rails—one reason ZEC sometimes navigates listings differently than XMR. That said, both have faced delistings in 2024–25 as exchanges recalibrated risk. Blockworks+1

2) The 2025 ZEC rally: what changed “now”?

2.1 A visible narrative: “privacy rotation” in Uptober

Coverage in October spotlighted a return of the privacy trade—ZEC, and to a lesser degree DASH/RAIL, outperforming as capital rotated to 2017–2018-era narratives amid macro uncertainty and rising surveillance debates. CoinDesk summarized a “back-to-roots” move with ZEC notably leading daily and weekly gains. coindesk.com

Multiple market desks tracked ZEC’s multi-hundred-percent monthly gain (variously reported ~340–520%), bringing it to multi-year highs and into overbought territory—yet still far below its early-cycle ATH, which fuels “catch-up” narratives. The Cryptonomist+1

2.2 Zcash-specific catalysts: roadmap + wallet UX

Unlike a pure meme rotation, ZEC also had fundamental talking points:

  • ECC’s 2025 roadmapping: public updates described workstreams tied to NU7, including Zallet (a modern replacement for zcashd’s CLI wallet), memo bundles, and cross-ecosystem coordination—signals of active core development. Electric Coin Company

  • Zashi wallet: ECC’s mobile wallet effort has been a steady drumbeat. Content across ECC’s site and ecosystem pages highlights shielded-by-default UX, with integration work (e.g., Coinbase/Flexa mentions in ECC materials) and privacy posture posts; forum notes in 2025 referenced Tor integration expanding inside Zashi (beta), helping network-layer privacy for common actions. Even incremental UX wins can expand the reachable userbase and stoke interest. Zcash Community Forum+3Electric Coin Company+3Electric Coin Company+3

  • Protocol coordination: A mid-2025 community forum post laid out a shared protocol roadmap across ECC, Zcash Foundation, Shielded Labs, and others—18-month targets that gave investors a clearer line of sight into upgrades. Zcash Community Forum

  • Consensus direction: Zcash figures have discussed moving beyond today’s PoW—previously framed as PoS or hybrid PoW/PoS in community and ecosystem channels—which, while not imminent, feeds “structural change” narratives that crypto markets tend to pre-trade. news.bit2me.com+1

Put together, these are “there’s a plan and it’s shipping” signals—precisely what fuels momentum when macro winds (and social chatter) align.

2.3 Market microstructure: squeezes and funding

Price action this steep is rarely just fundamentals. Analysts flagged short squeezes and crowded derivatives as accelerants: funding flipping hard, shorts liquidated into thin order books, and “Uptober” reflexivity doing the rest. External commentary cited Coinglass metrics and chart setups consistent with squeeze dynamics. BeInCrypto+2coindesk.com+2

Takeaway: A live narrative (privacy), credible “we’re shipping” signals (roadmap + wallet), and derivatives-driven reflexivity made ZEC the right token in the right week.

3) Technology 101—why ZEC and XMR feel so different

Feature Zcash (ZEC) Monero (XMR)
Privacy scope Optional: transparent or shielded Mandatory: every tx private
Core primitive zk-SNARKs (Halo 2, Orchard) Ring signatures + stealth addresses + RingCT
Auditability Can use transparent rails for KYC edges; shielded pool for privacy Strong default privacy; chain analysis is significantly harder
Trade-offs Heavy cryptography; proving costs/UX matter; optionality helps listings Default privacy = strong guarantees but higher listing friction

Zcash: zk-SNARKs in practice. A sender constructs a succinct proof that the transfer obeys the rules (no double spend, amounts balance) without revealing sender, receiver, or amount. Since NU5, Halo 2 eliminated trusted setups for new circuits, strengthening the model. Z.Cash

Monero: RingCT by default. Your transaction appears among a “ring” of decoys; the true signer is computationally hidden, the amount is masked (confidential transactions), and the recipient uses a one-time stealth address. Monero made RingCT mandatory in 2017, creating a uniform privacy surface. getmonero.org, The Monero Project

Which is “better”? It depends on your threat model and your venue needs. Traders and businesses often appreciate ZEC’s optionality; privacy absolutists prefer XMR’s defaults.

4) Policy & listings: the gravity you can’t ignore

  • MiCA—the EU’s crypto framework—has been fully applicable for service providers since Dec 30, 2024, with documents and law-firm briefs throughout 2025 explaining the new requirements. MiCA doesn’t “ban privacy,” but operational Travel Rule realities and compliance workflows push exchanges toward assets that can demonstrate transparent edges when needed. That’s one reason you’ll see uneven listing policies across privacy tokens. esma.europa.eu+1

  • Delistings (2024–25): several major venues removed privacy pairs or entire assets (notably Monero, but also Zcash in some regions/pairs at times). The trend was widely reported—OKX and Binance changes were among the most cited. This matters: fewer CEX venues = tighter liquidity and higher volatility when flows return. Blockworks+1

Why this matters for ZEC’s rally: if XMR access tightens and a broader “privacy bid” returns, ZEC becomes the liquid proxy on surviving venues—especially when paired with upgrade headlines. That relative scarcity can amplify moves.

5) What actually drove ZEC “up now” (the composite view)

A. Macro narrative

  • “Uptober” risk appetite + rotation to 2018-style narratives (privacy, payments), with CoinDesk documenting sector-wide outperformance and ZEC leading. coindesk.com

B. Project-level catalysts

C. Microstructure fuel

  • Short squeezes and funding flips reported by analysts; Coinglass shows how to track ZEC funding and liquidations, and media highlighted squeeze mechanics during October’s climb. Reflexivity 101. BeInCrypto+1

D. Relative positioning vs. Monero

  • XMR’s default privacy continues to collide with venue policies; ZEC’s optionality and fresh UX work presented a more “listable” privacy proxy for traders during October’s bid. Blockworks+1

6) Trading ZEC/XMR in 2025–26 without getting wrecked

1) Respect liquidity. During regime shifts, spreads and depth change by the hour. Use limit orders or RFQ/intent routes when possible. If you must cross, size accordingly.

2) Track derivatives pressure. Squeezes cut both ways. Monitor funding, OI, and liquidations; a steep negative funding print + rising OI can precede violent upside, but positive funding + declining OI can mark exhaust. Coinglass is a common reference for ZEC’s perps metrics. coinglass

3) Don’t forget execution bps. Privacy-sector volatility can make you bridge, rebalance, and re-collateralize often. Compress steps: swap + bridge in one flow and capture cashback via Chainspot —small bps saved compound over a season. https://app.chainspot.io

4) On the ZEC side:

  • Watch shielded pool usage and wallet releases (Zashi updates, mobile UX improvements). These are adoption levers. Electric Coin Company+1

  • Follow ECC/ZF forum threads for NU7 and any consensus experiments; price often front-runs credible delivery. Zcash Community Forum

5) On the XMR side:

  • Monitor venue news (pair removals/relists). Fewer fiat/USDT ramps increase DEX reliance and volatility when narratives flip. Prior delistings have been well-covered. Blockworks

6) Risk hygiene:

  • Avoid infinite approvals on fast-moving DEXes; use spend limits.

  • Hold a gas buffer on two chains—if a venue freezes or a chain stalls, you can still move.

  • Keep a journal (what you did, when, where). Day-to-day you’ll forget; risk managers won’t.

7) Use-case snapshot: who actually needs private payments?

  • Individuals: payroll, remittances, or medical payments where public ledgers are too revealing.

  • Businesses & NGOs: sensitive supplier flows, salaries in hostile regimes, or donor privacy—compliant edge transparency with internal privacy is often the target.

  • On-chain pros: traders hedging exposure without adversaries reading their PnL in real time.

ZEC’s model (optional privacy) maps to “private inside, transparent at the edge” workflows that compliance teams can live with. XMR’s model maps to maximum default privacy for users who refuse optionality. Neither is “right” universally—just different.

8) The regulatory scoreboard (2025–26)

  • MiCA sets a harmonized EU regime (stablecoins effective June 2024; CASP rules effective Dec 30, 2024). In 2025, ESMA and law firms published how-to-comply guidance—this shapes wallets, exchanges, and payment providers. Privacy itself isn’t outlawed, but process is king. esma.europa.eu+1

  • Exchange delistings of privacy coins (2024–25) are still the single biggest market-structure driver—OKX and Binance announcements changed liquidity maps for XMR, and in some cases ZEC, even if temporarily or regionally. It’s the background hum every trader should hear. Blockworks+1

Practical implication: a token that can be supported with some transparency (at least at ramps) will usually enjoy broader venue access. That’s been a tailwind for ZEC relative to XMR in 2025’s rotation.

9) Outlook: what could sustain (or end) the ZEC uptrend?

Sustainers

  1. Product UX keeps improving (Zashi maturity, wallet ecosystem, merchant rails)—grows real users. Electric Coin Company+1

  2. Roadmap delivery (NU7-related items; cross-ecosystem tooling)—anchors the narrative to code. Electric Coin Company

  3. Macro privacy bid—new CBDC pilots, KYC-heavy ramps, or data-leak scandals re-ignite interest. CoinDesk already captured the “privacy assets repricing” frame in October. coindesk.com

Risks

  1. Overstretch and funding whiplash—parabolic weeks can retrace brutally; press coverage has already warned about overbought conditions and potential for sharp corrections. Cointelegraph

  2. Policy shocks—tightening AML interpretations or venue compliance pushes can flip order-book depth overnight (we saw this in 2024–25 delisting waves). Blockworks

  3. Delivery slippage—if roadmap items drift or wallet UX stalls, the narrative weakens.

Base case for 2026: privacy remains a core sub-theme, not the main show. Winners will be the projects that ship, scale, and interoperate with compliant edges.

10) Quick “cheat sheets” you can reuse

ZEC watch-list

  • ECC blog + Zcash forum → roadmap checkpoints (NU7, Zallet, memo bundles). Electric Coin Company+1

  • Zashi releases (mobile stores / ECC updates), especially privacy-layer features like Tor routing. Electric Coin Company+1

  • Funding, OI, and liquidations on ZEC perps (daily). coinglass

  • Sector breadth: if privacy tokens as a basket move, ZEC often leads. coindesk.com

XMR watch-list

Execution

  • Keep native gas + stables on at least two chains at all times.

  • When rotating, compress steps: Chainspot for swap + bridge in a single flow; earn cashback so your farm/trade budget lasts longer. https://app.chainspot.io

11) For newcomers: a plain-English primer on the tech

ZEC in one paragraph: you can send in “transparent” mode (like Bitcoin—good for ramps and audits) or “shielded” mode where everything is encrypted but still provably correct. The magic is zk-SNARKs—you prove you’re allowed to spend without revealing the who/what/how-much. Since 2022, Zcash uses Halo 2, which got rid of “trusted setup” concerns for new circuits. Z.Cash

XMR in one paragraph: every transaction uses ring signatures (hide the real signer among decoys), stealth addresses (one-time addresses for recipients), and RingCT (hide the amount). That’s why chain analysis has such a hard time with Monero by design. RingCT has been mandatory since 2017. getmonero.org, The Monero Project

12) A realistic playbook (if you decide to trade this sector)

  1. Build two stacks: a daily hot wallet for degening and a vault (Safe multisig or hardware) for winnings.

  2. Size to liquidity, not conviction. If you need to move size, use RFQ/intent flows or ladder limits.

  3. Watch derivatives: spikes in negative funding + climbing OI can precede squeezes (up and down). Track ZEC’s perps metrics before choosing between market and patient orders. coinglass

  4. Have a routing plan: if you’re buying ZEC on Chain A but collateral sits on Chain B, don’t stitch 3 tabs together—swap+bridge once and be done. That’s where Chainspot earns its keep (and cashback).

  5. Know the venue map—what pairs exist where; how withdrawals behave; where privacy assets can be posted as collateral (if anywhere).

  6. De-risk fast: if you catch a squeeze, pre-set reduce-only take profits. Parabolic phases fade without notice.

13) Frequently asked questions

Is ZEC “safer” from regulation than XMR?
Not exactly—both live under AML/Travel Rule realities. But ZEC’s optionality means an exchange or business can choose transparent edges for reporting, which in practice has helped it navigate listings in some jurisdictions. XMR’s mandatory privacy can make listing/compliance workflows harder; hence more delisting headlines in 2024–25. Blockworks

Is ZEC’s rally sustainable?
Only if use grows (wallets, merchant rails), roadmap ships, and the privacy bid persists. Overbought conditions + funding whipsaws can cut rallies short, as several outlets warned in October. Cointelegraph

What’s a “short squeeze,” and did it matter here?
A crowded short + upside catalyst forces buy-ins (liquidations), sending price higher and liquidating more shorts. October coverage and derivatives dashboards pointed to exactly that dynamic in ZEC. BeInCrypto+1

How much supply does ZEC have?
ZEC’s max supply is 21M, like BTC; circulating estimates hover in the mid-teens (millions). Always check a reliable dashboard before sizing (Coinglass lists supply alongside derivatives metrics). coinglass

14) Bottom line (and how to act without donating edge)

  • Why ZEC is up now: sector rotation + visible delivery (roadmap, wallet privacy UX) + derivatives reflexivity. BeInCrypto+3coindesk.com+3Electric Coin Company+3

  • What sustains it: actual users (wallets, payments), code shipped, and policies that exchanges can work with.

  • What kills it: policy shocks, delivery slippage, and funding-driven blow-offs. Cointelegraph+1

  • How to trade it: size to liquidity, watch funding/OI, and compress your routes so you keep your basis points.

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Sources & further reading

  • Privacy-sector rotation & ZEC leading: CoinDesk market coverage (Oct 10 & Oct 22, 2025). coindesk.com+1

  • Magnitude of the October move & overbought risk: Cointelegraph and Invezz round-ups. Cointelegraph+1

  • ECC roadmap & 2025 updates (NU7, Zallet, memo bundles): ECC blog + forum. Electric Coin Company+1

  • Zashi wallet posture and Tor integration (beta): ECC site + Zcash forum notes. Electric Coin Company+2Electric Coin Company+2

  • Consensus direction (PoS/hybrid) discourse: community/ecosystem posts. news.bit2me.com+1

  • Short-squeeze/funding context: BeInCrypto on short interest; CoinDesk daily wrap; Coinglass dashboards. BeInCrypto+2coindesk.com+2

  • Monero delisting backdrop: Blockworks; Binance/other coverage; industry recaps. Blockworks

  • MiCA timing & 2025 compliance lens: ESMA final report (2025) and law-firm guidance. esma.europa.eu+1

  • Tech basics: Zcash zk-SNARKs/Halo 2 docs; Monero RingCT moneropedia. Z.Cash+1

Nothing here is financial advice. Trade responsibly, size humbly, and make your routes cheap.

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