Privacy coins played a central role in the cryptocurrency sector throughout the second half of 2025. Leading assets like Zcash (ZEC) have endured significant declines and continued to outperform the market even as most cryptocurrencies continue to bleed.
BeInCrypto spoke to several experts to understand why privacy coins are proliferating now and whether it’s possible to identify the next major cryptocurrency opportunity before it becomes mainstream.
Privacy Coin Remains No.1 as Best-Performing Sector in the Market
BeInCrypto reported a month ago that privacy-focused cryptocurrencies are emerging as the best-performing segment of the market. Notably, this remains the case today, even as the broader market extends its two-month slump.
Privacy coins have soared 276.4% since the beginning of the year, making them the strongest and one of only two sectors with positive returns this year.
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In contrast, Bitcoin (BTC) and Ethereum (ETH) have both turned negative due to recent drawdowns. Notably, since the beginning of October, ZEC’s value has increased by more than 700%. DASH (DASH) is also up nearly 200%, showing strong momentum.
What is driving the 2025 privacy coin rally?
According to Nick Pucklin, a crypto analyst and co-founder of Coin Bureau, this rise is closely tied to the sharp rise in global scrutiny and capital controls.
He pointed to examples such as Turkey’s giving financial watchdogs broad powers to freeze crypto accounts. Additionally, regulators around the world are increasing their oversight of digital assets.
Pucklin explains that Bitcoin and Ethereum no longer embody the original “cypherpunk” ideals of privacy and resistance to censorship. Instead, they have become highly traceable.
There is renewed interest in cryptocurrencies, which offer stronger privacy protections because they are even easier to monitor than cash.
“There are ideological elements from early adopters who are losing faith in the Bitcoin story due to the overwhelming involvement of institutions; privacy advocates who no longer see Bitcoin as a solution; and investors who are trying to ride the wave of momentum. Zcash, for example, is up more than 1,500% in the past year. It’s understandable that people want a piece of it,” he said.
Jamie Elkaleh, CMO of Bitget Wallet, shares a similar view. He suggested that as regulatory clarity improves and institutional adoption accelerates, users are increasingly concerned about AI-driven surveillance and pervasive transparency of on-chain activities.
Elcale emphasized that this tension is reshaping expectations across the industry. Clearer rules are attracting more mainstream participants to the market, but these users come with a different set of demands.
“What we are seeing is a maturation of the industry, with clearer rules bringing in more mainstream users and those users increasingly expecting financial privacy, sovereignty and secure tools as baseline features rather than add-on options,” he informed.
Meanwhile, NoOnes founder and CEO Ray Youssef attributes the rise of privacy coins to a combination of narrative rotation and macroeconomic tailwinds.
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He observed that several years after Bitcoin and Ethereum and the meme-driven altcoin cycle were institutionalized, capital is flowing into assets that are now perceived as “crypto by design” with decentralization and user-controlled privacy at their core.
Youssef added that institutional participation in cryptocurrencies continues to grow. Therefore, many retail traders and crypto-native users are looking for projects that restore a sense of autonomy and privacy.
Still, he emphasized that this change does not mean eliminating institutional capital completely. Rather, both forces can coexist and strengthen each other as a compelling narrative gains momentum.
“The ideological thread of privacy and sovereignty provides a powerful narrative and helps dedicated users. The economic thread of short, medium and long term profits attracts both traders and allocators. To sustain the cycle, we need to ensure that the markets overlap, the narrative that attracts believers and the metrics/flows that attract capital. What is happening now is ideology fueling the fire and economics adding fuel to the fire,” the executive commented.
Rob Viglione, founder of zkVerify and CEO of Horizen Labs, emphasized that the new interest reflects broader market changes. He noted that users are increasingly recognizing privacy as a core requirement for real-world use, rather than a niche feature.
He explained that the current momentum goes beyond an isolated token rally. This signals a deeper reassessment of how privacy should work across the crypto stack.
“Early privacy coins were groundbreaking, but they were also isolated. They proved that strong cryptography was possible, but they existed outside the environment where most economic activity actually takes place,” Viglione said.
The difference with the current setup is that privacy is integrated directly into the Ethereum-based environment. Developers are no longer pursuing standalone privacy chains.
Instead, they are looking for privacy solutions that integrate into the existing ecosystem of liquidity, users, and applications already in place.
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“That’s why this moment is so important. Price trends are just surface-level signals of deeper changes. Privacy is becoming the expectation, not the exception,” the CEO said.
Will utilities become crypto’s next meme-level trend?
The proliferation of privacy-focused assets has also reignited other questions. Is this just a short-term pump cycle, similar to meme coin rallies of the past, or does it reflect a true shift to a utility-driven narrative? Analysts suggest the answer may lie somewhere in between.
Youssef said rallies in meme coins tend to be rapid, highly speculative, short-lived, and often burn out quickly. Once that momentum wanes, the market typically pivots to a narrative with more enduring value.
This includes areas such as payments, privacy, real-world transaction layers, and DeFi infrastructure. In this context, privacy tokens are gaining renewed interest as they offer clear autonomy, protection from censorship, and the ability to trade without the risk of exposure or unilateral suspension. he shared it,
“If users and allocators conclude that these features represent lasting utility rather than short-term hype, capital inflows into this sector could last far beyond a temporary narrative rotation.”
Pucklin elaborated that meme coins generally thrive during periods of high market strength. On the other hand, utility-driven tokens tend to perform better as investors become more cautious or consider redeploying their profits.
“But the thing to note here is that we are not seeing widespread rotation into utility tokens. There are some areas where we are seeing outperformance, but most altcoins are still underperforming Bitcoin. We have not seen anything like a traditional alt season yet, but until that happens, utility token gains are more the exception than the rule,” he revealed to BeInCrypto.
How to spot the next big crypto story
As new stories emerge faster than ever, identifying early breakout trends has become one of the biggest challenges and opportunities for crypto investors. Packlin explained:
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“Luck is as important as hard work. You can look at market inefficiencies or the migration of developers to new chains or projects. You can look at where the demand is. But at the end of the day, the story of cryptocurrencies is often as much about speculation as it is about fundamentals, and it can be hard to call it that. It’s often just about being in the right place at the right time.”
Nevertheless, the analyst outlined institutional investor trends as a good starting point for evaluating any sector.
“If I had to choose one story for this cycle, it would be RWA. Institutional capital is flowing into the tokenization of RWA. Remember, this sector also includes stablecoins, and we are seeing collaboration between RWA projects and institutions. Institutional capital flows are an important indicator to watch this cycle because it is based on long-term needs rather than hype,” Pucklin suggested.
Youssef took a more structured view, framing the process as “pattern recognition through signal triangulation.” He outlined key signals including actual user demand, on-chain activity, usage of protocol features, and expanded market access.
“For privacy, look for shielded TX adoption, exchange accessibility, wallet integration, and regulatory headlines. For DePIN, look for device adoption rates, partnerships with infrastructure players, real-world data feeds, and revenue per device. When it comes to AI and on-chain models, developer integrations, API demand, and token capture of value play key roles. DeFi/ In the case of RWA, its TVL, revenue sustainability, counterparty quality, and custody structure are likely to drive it.”In the next cycle, across all sectors, investors will need to monitor the durability and security history of tokenomics to see actual usage,” he elaborated.
The executive also revealed that regulatory sentiment plays an important role. When the environment is favorable, new stories attract attention much more easily. Finally, capital flows from retail traders, whales, and institutional investors can also be a signal.
“If these traits are moving together, you’re probably looking at an early meta,” he emphasized.
Finally, Elcarre believes that identifying new metas starts by tracking early indicators such as developer activity, new exchange listings, and social momentum on platforms like X. Low-cap tokens with solid fundamentals often show early signs of story formation.
He argued that investors who blend behavioral signals with fundamental analysis can get the clearest picture of where traction is building before it shows up across the market. Mr. Elcale said:
“The strongest signals today are inflows from institutional investors, expansion in sector-level market capitalization, and early convergence of categories such as RWA, DePIN, AI, and DeFi. These industries offer tangible utility, from real-world infrastructure to AI-enabled financial automation, and will Especially in the case of privacy coins, breakthroughs come from integrating zero knowledge and privacy tools directly into everyday wallets and DeFi products, making privacy an easy option. ”
These metrics do not guarantee success, but they provide a useful framework for finding early momentum. As user demand, developer activity, regulation, and capital flows begin to align, new narratives can form long before they become mainstream.
