# The Watch List: Zcash (ZEC) _Is ZEC a speculative derivatives trade or "Private Bitcoin?"_ May 15, 2026 • Michael Nadeau --- # The Watch List: Zcash (ZEC) ## Is ZEC a speculative derivatives trade or "Private Bitcoin?" Michael Nadeau May 15, 2026 Hello readers, A brief note to let you know that we are currently running a sale on the TDR Pro annual plan. If you’d like to lock in at $16.67/month, you can sign up [here](https://thedefireport.io/pro20?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) (if you’re on the monthly plan, you can switch to annual with one click). Back to business. Zcash is back in the spotlight. Founded in 2016, the L1 was launched with a max supply of 21 million coins. Proof of work consensus. And a disinflationary issuance schedule based on a four-year halving. Just like Bitcoin. The key difference? Privacy. Leveraging zero-knowledge proofs (pioneered by Zcash), users can transact privately, but prove the details of what happened (for compliance) when needed. For years, that vision felt early. Maybe too early. Privacy was treated as a niche concern. A cypherpunk ideal. Something for a small subset of internet users who cared enough to opt out. *But AI is changing the equation.* As AI accelerates, it has the potential to supercharge digital and financial surveillance — making it easier to collect, analyze, and act on our online behavior, identities, transactions, and relationships at scale. As this plays out, private digital money feels less like a *fringe idea* and more like something we should all be paying attention to. As such, this week’s edition of* *[*The Watch List*](https://thedefireport.io/price-targets?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec)* *covers Zcash. Topics covered: - [The Product](#the-product) - [Addressable Market](#addressable-market) - [Financials](#financials) - [Funadamentals](#fundamentals) - [Token Economics](#token-economics) - [Competition](#competition) - [Valuation](#valuation) - [Risks](#risks) - [Closing Thoughts](#closing-thoughts) *Please note that you can click the data citation note under each chart to access the supporting dashboard for this week’s report. *The DeFi Report is powered by **[Galaxy](https://www.galaxy.com/?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec)**: helping the world invest, build, and transform — relentlessly. * [](https://www.galaxy.app/product/crypto/staking?utm_source=TheDeFiReport&utm_medium=Newsletter&utm_campaign=Staking+Launch)With GalaxyOne Staking, you can earn up to an estimated 6.50% in variable staking rewards with 0% platform commission through 2026*. While other platforms can charge up to 35% in commission, GalaxyOne charges 0% through the rest of the year. Other fees may apply, see terms. Let’s go. # The Product “Privacy as a Product.” Zcash is a proof-of-work layer 1 blockchain. The product is simple:* private transactions *using the native token, ZEC. Now. This seems like a really fringe thing. Nobody really cares about privacy. And aren’t “privacy coins” really just tools for criminals? Yes, and no. We tend to stand with the cypherpunks on this one. Privacy is incredibly important. And it’s certainly not just for criminals. Digital privacy is about preserving personal freedom in a world where everything can be tracked, scored, analyzed, and acted upon. Most people are not doing anything wrong when they close the bathroom door. Use a password. Draw the blinds. Or choose not to publish their bank statement online. In many ways, privacy is fundamental to human dignity and autonomy. The problem is that the *internet has slowly normalized the exact opposite*. We now leak massive amounts of personal data through search and social media. Payments and location tracking. Apps and email. Never mind what our financial accounts reveal about us. On its own, any one data point may seem harmless. But when aggregated, it becomes a detailed map of who we are. What we believe. Who we know. Where we go. What we buy. What we fear. And what we might do next. *AI makes it that much more powerful.* With AI, surveillance is no longer just about collecting data. It’s about interpreting it. Predicting behavior. Ranking people. Flagging anomalies. Inferring intent. Personalizing persuasion. Automating enforcement. And doing it all at scale. That matters even if you are doing nothing wrong because “wrong” is not fixed. It can change depending on the company, platform, government, political environment, regulator, bank, employer, insurer, or algorithm making the decision. A perfectly normal transaction today could be misunderstood tomorrow. A donation, subscription, location, medical expense, political view, religious affiliation, or relationship could be taken out of context. A person may not be guilty of anything, but still be de-platformed, de-banked, denied access, targeted by scams, discriminated against, or placed into a risk bucket they never knew existed. Financial privacy is especially important because payments are intimate. They reveal more than what someone buys. *They reveal patterns of life.* They can expose health issues, political beliefs, religious practices, relationships, business strategy, travel, personal struggles, and future plans. For companies, transparent payments can reveal suppliers, payroll, customers, margins, and competitive strategy. For individuals, they can reveal vulnerabilities. That is why *private* digital money matters. Not because everyone needs secrecy all the time. But because a *free society needs the option of confidentiality*. People should be able to prove what needs to be proven, comply when necessary, and disclose selectively — without broadcasting their entire financial life to the world by default. Zcash was built to deliver this to the masses. ##### Roadmap The Zcash network has historically been used simply for private (shielded) ZEC transactions. But if Zcash wants to become an infrastructure for all kinds of private payments (stablecoins), it needs to keep building. ##### Zcash Shielded Assets [Zcash Shielded Assets](https://zips.z.cash/zip-0227?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) would allow assets beyond ZEC — such as stablecoins and other digital assets to be issued and transferred within Zcash’s shielded environment. Furthermore, [CrossPay with Near Intents](https://support.zodl.com/article/26-swapping-into-zec?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) was recently rolled out via the Zodl wallet. It allows users to leverage shielded ZEC to make cross-chain payments to the recipient’s preferred asset (including BTC and stablecoins). Key Takeaway: ZSA’s could be the catalyst for Zcash to turn into a platform for apps offering private payment solutions. CrossPay with Near Intents appears to be an interim solution enabling cross-chain shielded payments. ##### The Key Questions - Is privacy infrastructure? Or can an existing L1 or L2 offer what TradFi needs? We tend to think that Zcash will be a solution for hardcore privacy maximalists. But we struggle to see how Zcash can become the place that Wall Street wants to build. Rather, we still think this will play out on the smart contract chains via Zero-Knowledge Proofs (more on this topic in future analysis). - Can Zcash scale to support private payroll? Micro transactions? It is our understanding that the chain cannot support these use cases today, though the roadmap points in this direction. - Is crypto making privacy important again? Do normies care? We tend to think they remain blissfully unaware. And that some sort of digital data hack crisis would be the only catalyst for private financial transactions to go mainstream. Therefore, Zcash is probably still a niche product until AI advances further (which could be the catalyst for the “big data leak/hack”). # Addressable Market ##### What % of BTC’s Market Cap should Zcash capture? The Zcash evangelists will tell you it should be “10% of Bitcoin’s Market Cap.” It’s currently just 0.57% of BTC’s market cap (up 19x from 0.03% in September of last year). Therefore, 10% of BTC implies 17x upside (in addition to the 19x move we’ve seen since Sept. of last year). More on ZEC’s valuation later in the report. # Financials ##### Miner Revenue [Data: The DeFi Report, CoinMetrics](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Zcash miners earned $38.5m in block subsidy payments over the last 90 days, down 30% q/q, but up 754% y/y. - $62k came from transaction fees. Therefore, 99.8% of Zcash miners' revenue comes from network inflation. - This is the same security budget issue that BTC has. If the ZEC price does not rise to offset the disinflationary effects of block subsidies (which decline every 4 years), network security will come under pressure. ##### Business Model - 80% of Block Subsidies go to Zcash miners ($98m over the last year). - 12% goes to the Zcash Lockbox/Community Funding supporting future development ($14.7m over the last year). - 8% goes to Zcash Community Grants supporting ongoing development ($9.8m over the last year). # Fundamentals ##### Daily Value Settled [Data: The DeFi Report, CoinMetrics](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Over the last 90 days, Zcash has settled $21.8b of value, down 43% q/q, but up 231% y/y. - Interestingly, Zcash settled value (and ZEC price) tends to explode* late* in crypto cycles, after BTC has topped. Why? It’s difficult to say. Some users might switch to ZEC for privacy after the market’s peak. Others may be chasing the latest “late cycle” narrative. ##### Hash Rate [Data: The DeFi Report, CoinMetrics](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Zcash’s hash rate is up roughly 80% since October of last year. - That said, if Zcash is “private Bitcoin,” it does not share Bitcoin’s security guarantees. - At the same time, we do not think it’s trivial to attack the Zcash network. The Equihash ASIC market is specialized. Rentable hash power (needed to overtake 51%) appears low, and buying the machines and power/infrastructure would likely require 10’s of millions of dollars. ##### Transaction Count [Data: The DeFi Report, Coinmetrics](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Zcash averaged 4.9k transactions per day over the last 90 days, down 40% q/q but up 347% y/y. - As shown in the chart, there has been very little change in onchain behavior since the network launched in 2016. 5k tx/day tells us this is still a very niche product. # Token Economics Max Supply: 21 million ZEC Circulating Supply: 16.68 million ZEC (79%) ##### Token Allocation & Unlocks [Data: The DeFi Report, Tokenomist](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Miner Rewards: 85% (88.6% unlocked) - Community Grants: 4.0% (73% unlocked) - Founders, Employees, Advisors: 2.9% (100% unlocked) - Zcash Foundation: 2.0% (100% unlocked) - Lockbox: 2.9% (30% unlocked) - Electric Coin Company (Devs): 1.8% (100% unlocked) - Investors: 0.8% (100% unlocked) - Strategic Reserve: 0.6% (100% unlocked) ##### Shielded vs Non-Shielded Supply Data: The DeFi Report - 31% of ZEC on Zcash is currently “shielded,” up from 25% in September of last year. ##### Unlocks Through Year-End - Miners: 1.8k ZEC/day ($946,800/day at the current ZEC price). - 80% of the miner reward goes to miners, with 12% to the Lockbox, and 8% to Zcash Community Grants. ##### Takeaway Zcash token economics are similar to BTC: - 21m ZEC. - 4-year halvings. - Miners are compensated with proof-of-work block rewards (the current annualized inflation rate is 3.9%). - The next halving date is in late ‘28, when the ZEC block subsidy will be cut from 1.56 ZEC/block (1.8k ZEC/day) to .78 ZEC/block (900 ZEC/day). # Competition ##### ZEC vs Monero: Transaction Count [Data: The DeFi Report](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Over the last 90 days, Zcash has averaged 19.1% of Monero’s transaction count. - This is consistent across the entire history of the top two privacy assets/chains. So, why is Monero used more than Zcash? We think it’s due to Monero’s “always on” privacy vs. Zcash's “opt-in” — which we view as a key feature when compared to Monero (for compliance reasons). - Despite doing just 20% of Monero’s transactions, Zcash is valued at 1.2x Monero today. # Momentum & Moving Averages ##### Futures Open Interest Cash Margined Data: The DeFi Report, Glassnode - As shown above, the recent move for Zcash appears to be a *speculative derivatives trade* driven by an army of high online promoters. - "Private Bitcoin” is very real. But it’s also not likely to be the thing that powers ZEC in the near future, in our opinion. ##### Spot Volumes Data: The DeFi Report, Glassnode - Spot volumes are down 73% from the November ‘25 period and back to levels last seen in mid-2024 to mid-2025. ##### Short Term Moving Averages [Data: The DeFi Report](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Zcash currently trades significantly above all of its short-term moving averages. ##### RSI [Data: The DeFi Report](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Zcash recently revisited the extreme overbought conditions it reached in October/November of last year. - So far, it has been unable to reach new all-time highs. Investors should note that we typically see a mean reversion after *overbought *conditions like this. ##### Long Term Moving Averages [Data: The DeFi Report](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - Zcash is also trading *well above* its long-term moving averages. # Valuation This is anyone’s guess. Zcash is like Bitcoin in that the valuation is based on supply/demand. Conviction. Narratives. And the size of the “Zcash online Army.” Could it get to 10% of BTC’s market cap? Anything is possible. If it’s able to continue gaining market share on BTC in the near term, we think it will be due to the size of the “online (crypto native) Army” rather than mainstream adoption. ##### You have to buy ZEC to use the Product One thing that’s interesting about Zcash is that *you have to buy the asset* to use the product (similar to BTC, ETH, SOL, etc). Therefore, if privacy adoption continues to grow in the coming years, more people will be buying ZEC. Which means they will likely sell other assets to do so. What if 10% of BTC holders convert to ZEC? And what if this extends to ETH & SOL? We think this is the path for ZEC to grow massively, outside mainstream adoption (by pulling capital from the rest of the crypto ecosystem). ##### ZEC/BTC Data: The DeFi Report - ZEC recently made a second attempt at hitting an all-time high against its BTC pair. - So far, it’s failed to breach these levels, even after 10x+ gains over a brief period. # Risks - Normies don’t care about privacy. Do we need a crisis for them to care? Can the “Zcash online Army” make them care? - Execution. Zcash currently cannot support or scale broader use cases beyond onchain private ZEC transfers (though ZSA is currently under development). Can ZEC “win big” with only niche appeal amongst crypto users? - Speculation. Zcash appears to be a speculative derivatives trade at the moment. That makes ZEC highly reflexive and susceptible to historically *brutal* bear markets. Is this in the past now? With crypto natives now all holding the asset? If so, what’s the catalyst for the next move? # Closing Thoughts We like Zcash. And we think digital privacy is incredibly important. But we also think that most people do not care about privacy. Therefore, the most important feature for Zcash is its “online Army.” It’s our view that this should *not be faded. * Why? Zcash appears to have support across *all of crypto. *That’s unique as far as we can tell. As noted, if BTC and ETH holders diversify into ZEC, this could propel ZEC in the near term, even without mainstream adoption. Not to mention. If the ZEC price remains elevated, this will secure the additional capital needed to build out additional use cases in the coming years (via the Lockbox, as 12% of miner rewards are moved there for future development). TDR Pro currently does not hold any ZEC. With that said, we may seek to acquire some if the market throws us a “fat pitch.” We are also exploring additional ways to get exposure to the digital privacy sector. If you’d like to be notified if/when we add ZEC to our active portfolio (or any other assets), you can subscribe to TDR Pro and get one month free [here](https://thedefireport.io/friends?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec). And if you’d like to lock in at $16.67/month, you can get 20% off our annual plan [here.](https://thedefireport.io/pro20?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec)  ##### Related - [Zcash Dashboard](https://dune.com/the_defi_report/zcash?utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) - [Zcash Founder on Bankless](https://www.youtube.com/watch?v=Vii3Pvfby74&utm_source=thedefireport.beehiiv.com&utm_medium=referral&utm_campaign=the-watch-list-zcash-zec) Take a Report. And Stay Curious. ***Disclaimer****: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.*