ZCASH, Monero Win Big As Privacy Coin Narrative Gets Heated

The privacy coin segment has been heating up this past week, just as most top cryptocurrencies experienced more downside.

Both ZCASH and Moneros XMR, two of the biggest stablecoins, defied the bearish wave in favor of impressive upside.

For context, ZCASH pushed as high as $750 in the last 12 hours, which was close to its recent ATH. A clear sign that the privacy coin has maintained robust bullish momentum observed since late September.

ZCASH price action in the last 24 hours made it the coin with the highest daily gains among the top 50 coins by market cap.

Meanwhile, XMR price pushed as high as $440 in the last 24 hours, but it was down to $433 at press time. The privacy coin previously traded as low as $360 during the same trading session.

While it was up by only 4% from its opening price, XMRs press time price tag was equivalent to a 20% rally from its recent low.

DASH, the third-largest privacy coin, was up by roughly 29% in the last 2 days, but its previous downside ensured that it was in the red on the weekly timeframe.

Why Privacy Coin Market Has Been Winning this Week

Privacy coins rallied for numerous reasons. Among them is a major data breach that occurred in September, where millions had their data exposed.

The markets also realized that privacy coins had very little exposure to macro factors such as tariff wars.

Aside from the rising appeal for privacy coins, and the surprising economic isolation, the segment was also driven by recent institutional attention.

The Grayscale ZCASH trust was among the demand sources. However, most of the institutional appeal was driven by the Winklevoss twins, who recently revealed plans to create a ZCash treasury company. They reportedly aim to acquire 5% of the privacy coin supply.

The U.S government seized roughly 127,000 BTC in October this year. This particular incident may have accelerated the move towards privacy coins. They are ideally suited for the offshore market which could be a key demand driver in the future.

ZEC global offshore wealth marketshare/ source; Grayscale

Recent data showed that ZCashs share of the global offshore wealth market has been rising.

Can the Top Privacy Coins Maintain the Bullish Momentum？

Although the privacy coin narrative has been fueling the recent momentum, some market signals suggest that a major correction might be on the cards.

Both ZEC and XMR have been moving to form a double top pattern. However, the RSIs on both coins show relative trend weakness.

XMR price action/ source: TradingView

The recent hype around privacy coins meant that the segment was receiving more attention. This may signal that investors who got in early may be incentivized to take profits.

The pullback in the first half of the week confirmed that some investors were eager to take profits.

Whales sold off about $22 million worth of ZEC in the last 24 hours in the spot market on OKX and Binance.

They also executed almost $200 million worth of net short positions during the same period, highlighting rising bearish expectations.

Privacy coin may face an underlying risk that has been present for quite a while. Regulatory crackdowns may lead to exchange delistings, which could target privacy coins. This already happened to XMR and ZEC may end up going down the same road.