Zcash could become a meaningful challenger to Bitcoin’s dominance among digital assets as rapid artificial intelligence adoption increases demand for financial privacy and heightens concerns about AI-powered surveillance, according to Grayscale. In a new research report, Grayscale head of research Zach Pandl said Zcash (ZEC) has “second mover advantages” that could help it compete with Bitcoin’s (BTC) entrenched network effects, which previous alternatives such as Litecoin (LTC) have not managed to overcome. The report said Zcash’s ability to shield transaction information may become more valuable as AI systems improve at analyzing financial activity at scale. Grayscale also noted that ZEC has risen roughly 19-fold over the past year, yet it still represents less than 1% of Bitcoin’s market capitalization, which the firm views as leaving room for further upside if Zcash gains market share. Pandl said Bitcoin’s liquidity and established network remain major strengths, while Grayscale cautioned that Zcash remains a high-risk investment and that any additional gains could be volatile and uneven.

Interest in the Zcash ecosystem is also expanding alongside ZEC’s strong price performance. According to Cointelegraph, Nasdaq-listed privacy technology company Cypherpunk Technologies increased its Zcash exposure by acquiring a mining fleet from Winklevoss Capital in a $33.33 million equity-based transaction. The operation is already online across US facilities and is producing about 4.2 GSol/s of Equihash hashrate, or roughly 18% of the Zcash network’s total computing power. Cypherpunk said the deal made its mining arm the network’s largest active fleet. Grayscale said Zcash could be valued at more than $4,000 if its market capitalization reached 5% of Bitcoin’s, underscoring the scale of the opportunity the firm sees if the privacy-focused asset continues to attract institutional and broader market interest.