Zcash Halving and Its Impact on the Privacy Coin Market

The halving event for Zcash scheduled in November 2025 has sparked renewed discussions about the significance of privacy coins in the fast-changing world of cryptocurrencies. With block rewards dropping from 3.125 to 1.5625 ZEC per block, Zcash’s supply has become more restricted, strengthening its deflationary approach and drawing comparisons to Bitcoin’s scarcity narrative . Yet, this halving is more than a technical milestone; it has triggered a complex mix of market turbulence, shifting investor attitudes, and heightened regulatory attention that could reshape the privacy coin industry.

Supply Shifts and Shielded Transactions: Evolving Market Structure

The immediate result of the halving was a 50% cut in new ZEC issuance, but its wider impact is tied to the increasing use of Zcash’s privacy capabilities. Currently, shielded pools account for 27–30% of all circulating ZEC, with a notable migration to the newer Orchard protocol

. Arthur Hayes, former CEO of BitMEX and a prominent ZEC investor, has been vocal in urging users to transfer assets into shielded addresses, claiming this move reduces liquidity and shifts the market’s structure . His “withdraw and shield” approach is based on the idea that coins held in shielded pools are less likely to be spent quickly, which tightens the available supply and increases price volatility.

This tactic has already had an impact: Zcash’s transaction fee income

in the 30 days following the halving, signaling a surge in network activity and a growing appetite for privacy-oriented services. However, this strategy also brings risks. Lower liquidity from shielded transactions could intensify price fluctuations, especially if institutional interest grows faster than retail involvement.

Institutional Interest and Regulatory Turning Points

Institutional participation has played a major role in Zcash’s rally after the halving. The Grayscale Zcash Trust, which now oversees $137 million in assets, highlights the increasing confidence from traditional financial players

. This stands in contrast to Monero’s strict privacy model, which has limited its institutional appeal due to regulatory concerns. Zcash’s optional privacy features, on the other hand, enable compliance with anti-money laundering (AML) rules, positioning it as a link between privacy and mainstream finance .

Nonetheless, regulatory challenges persist. The EU’s Anti-Money Laundering Regulation (AMLR), which will be enforced in July 2027, and the Financial Action Task Force’s (FATF) 2025 revisions, are expected to bring tighter restrictions on privacy coins . While Zcash’s adaptable privacy may help reduce some regulatory risks, the entire sector faces an unpredictable future. For example, the U.S. Clarity Act and Genius Act, both passed in late 2025, have offered some legal clarity by recognizing privacy as a legitimate financial tool . Still, there are unresolved issues regarding the enforcement of rules, especially concerning shielded transactions.

Market Swings and Investor Outlook: Two Sides of the Coin

The halving has heightened Zcash’s price swings, with its value

as of November 6, 2025. This impressive rise was driven by speculative buying, with ZEC’s negative correlation to drawing attention. When Bitcoin entered bearish periods, investors shifted to Zcash, from under $50 in early September to $400 by October. Open Interest (OI) in ZEC derivatives reached an all-time high of $1.13 billion in late November, indicating strong bullish sentiment .

Yet, volatility also brings risk. Zcash experienced a 30-day price drop of over 35% in November 2025, exposing the dangers of speculative trading

. James Wynn, a major player on Hyperliquid, forecasted a fall to $300 by year-end, and his short position at $684 became profitable as prices declined . The Fear and Greed Index highlights this contrast: while Zcash’s social sentiment remains upbeat at 62.5%, its Fear and Greed score of 41 suggests moderate bearishness, with a 35.5% tendency toward negative sentiment .

Wider Effects on the Privacy Coin Sector

The Zcash halving has also altered the broader privacy coin market. For a brief period, Zcash’s market cap surpassed Monero’s, hitting $7.2 billion compared to XMR’s $6.3 billion

. This change highlights Zcash’s technical strengths, such as its zk-SNARKs privacy system and its compliance-friendly design. Meanwhile, other privacy coins like and have posted gains of up to 90% in the past quarter, suggesting a wider move toward privacy-focused assets .

Still, Zcash’s lead is not guaranteed. Monero’s Fluorine Fermi upgrade in late 2025 improved its privacy features, and Litecoin’s experiments with hybrid privacy indicate growing competition. For Zcash, the challenge will be to sustain its balance between privacy and regulatory compliance—a delicate act that could shape its future prospects.

Conclusion: High Risk, High Potential

The November 2025 halving has placed Zcash at a pivotal moment. Its deflationary supply, growing institutional backing, and privacy advancements have fueled a record-breaking rally, but these benefits come with considerable risks. Ongoing regulatory uncertainty, possible miner sell-offs, and the volatility linked to shielded transactions could unsettle the market. For investors, Zcash offers a high-risk, high-reward proposition: a privacy-focused asset that could outperform Bitcoin during downturns, yet remains susceptible to regulatory actions and liquidity shocks.

As the privacy coin market continues to develop, Zcash’s ability to handle these obstacles will be crucial. Whether it cements its status as a leading privacy asset or is overtaken by regulatory and market shifts is still uncertain.