Grayscale touts Zcash as the most credible challenger to Bitcoin’s dominance in the digital currency segment, arguing that a relatively small change in market share could translate into an outsized upside for the privacy-focused asset.
In a March 18 research note, Zach Pandl, head of research at Grayscale, puts this opportunity in clear terms. Bitcoin still represents about 90% of the “cryptocurrency sector,” a segment the company estimates at $1.6 trillion spread across fifteen assets. Zcash, by comparison, is only a fraction of that total. But Pandl suggests the gap may not be structural.
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“Bitcoin was the first decentralized digital currency and remains by far the largest in terms of market capitalization,” he writes. “But there are other blockchains with a ‘digital currency’ use case.” Within this competitive set, Grayscale sees Zcash as being in a unique position to gain traction over time.
Grayscale says Zcash has 18x upside potential
The heart of the thesis rests on a capability that Bitcoin fundamentally lacks. While Bitcoin transactions remain completely transparent on a public ledger, Zcash offers protected transactions that hide the sender, recipient and transaction amount.
Pandl argues that this distinction is not merely technical, but market-defining. “Zcash offers protected transactions that hide senders, recipients and balances,” he notes, adding that “privacy will be essential, in our view, for certain types of users and transactions, and Bitcoin cannot meet this demand.”
The implication is clear: if demand for censorship-resistant private payments increases, whether driven by specific individuals, institutions, or jurisdictions, Zcash operates in a segment where Bitcoin is structurally constrained. Rather than competing head-on in all use cases, it targets a subset of transactions where transparency becomes a constraint rather than a feature.
The second pillar of Grayscale is less about design and more about trajectory. Zcash, now approaching its decade in operation, is described as entering a new phase marked by increasing adoption of its privacy features and new capital inflows.
“Zcash is almost 10 years old but seems to be entering a new chapter,” Pandl writes. “Use of its shielding technology is accelerating, highlighting market interest in privacy-preserving digital currencies. And new capital is entering the ecosystem to support Zcash wallet development and mining.”
The valuation argument follows directly from these two dynamics. Zcash’s ZEC token currently stands at a market capitalization of around $4 billion, representing around 0.3% of the broader digital currency segment.
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Grayscale’s scenario is deliberately conservative in its assumptions but aggressive in its implications. If Zcash managed to capture just 5% of this same segment, its valuation would increase approximately eighteen times. The calculations depend less on the absolute growth of crypto markets and more on relative positioning within the existing category.
Pandl is explicit about compromises. Zcash, he notes, is “smaller and more volatile than Bitcoin and therefore has a higher risk profile.” The positive scenario is linked to a reallocation of market shares and not to a guaranteed expansion of demand.
This view is not isolated. Several personalities have recently presented similarly asymmetrical scenarios for Zcash. Will McEvoy, CIO of Cypherpunk Technologies, described Zcash as “the most misvalued asset in crypto,” while Alliance DAO co-founder Qiao Wang called ZEC “1,000 times the bottom in crypto.” BitMEX co-founder Arthur Hayes predicts ZEC will reach $1,000 as a “first stop,” with a long-term target of $10,000.
At press time, ZEC was trading at $232.93.
Featured image created with DALL.E, chart from TradingView.com
