The Case for COTI: Capital Rotation, Privacy Innovation, and Undervaluation in a Bullish Crypto Cycle

The privacy-coin sector has entered a transformative phase in 2025, marked by rapid capital reallocation and technological innovation. Zcash (ZEC) has emerged as the dominant player, surpassing both Monero (XMR) and Stellar (XLM) in market capitalization, while projects like COTI are quietly positioning themselves as undervalued contenders with disruptive privacy solutions. This analysis explores the dynamics of capital flow, on-chain fundamentals, and the unique value proposition of COTI in a maturing crypto bull cycle.

Zcash's Rise and the Privacy-Coin Power Shift

Zcash's market capitalization surged to $9.41 billion in 2025, driven by a 1,172% year-to-date price increase and a surge in shielded transactions using zk-SNARKs technology, according to a Coinotag report. This growth reflects a broader shift in investor sentiment toward privacy coins that balance regulatory compliance with anonymity. Zcash's optional-privacy model-allowing users to choose between transparent and shielded transactions-has made it more attractive to institutions compared to Monero, which lacks such flexibility and remains delisted on major exchanges, according to a Coindesk analysis.

The Zcash Foundation reported that daily on-chain volume hit $15.1 billion, with shielded transaction activity rising in tandem with price momentum, as noted in the Coinotag report. Meanwhile, Zcash's market cap overtook Monero's ($6.3 billion) in late October 2025, fueled by a 1,000% price surge in three months and endorsements from figures like Arthur Hayes, who now holds ZEC as his second-largest liquid asset, as reported by Coindesk. This shift underscores a growing preference for privacy coins that align with evolving regulatory frameworks.

COTI's Privacy Innovation: Beyond Zero-Knowledge Proofs

While Zcash dominates headlines, COTI is carving a niche with a fundamentally different approach to privacy. Unlike Zcash's zk-SNARKs or Monero's ring signatures, COTI employs garbled circuits, a cryptographic method that encrypts both data and computational logic, as explained in a COTI news post. This innovation is particularly valuable for DeFi and real-world asset (RWA) applications, where businesses require confidentiality in both inputs and operations.

COTI's performance benchmarks are equally compelling. Its garbled circuits are reported to be 1,800 to 3,000 times faster than leading fully homomorphic encryption (FHE) solutions like Zama's TFHE-rs, as noted in the COTI post. This speed advantage addresses a critical barrier to adoption-cost and latency-positioning COTI as a scalable privacy layer for enterprise use cases. By integrating with EVM tooling and enabling selective disclosure, COTI aims to replicate the infrastructure-level adoption of HTTPS in the blockchain space, as the COTI post explains.

Undervaluation and Capital Rotation Dynamics

Despite its technological edge, COTI remains significantly undervalued compared to Zcash and Monero. While Zcash commands a $9.41 billion market cap and Monero $6.3 billion, COTI's valuation lags far behind, even as its v2 mainnet transition in 2025-shifting from a DAG-based L1 to an EVM-compatible L2-positions it to attract DeFi developers, as discussed in a Coinpaper price forecast.

On-chain metrics for COTI are less publicized, but its roadmap and performance benchmarks suggest untapped potential. Analysts project COTI's price could rise from $0.27 to $1.25 in 2025, with further upside if the broader market enters a bullish phase post-Bitcoin halving, as noted in the Coinpaper forecast. This contrasts sharply with Zcash's current valuation, which already reflects much of its growth potential.

Strategic Implications for Investors

The privacy-coin sector is witnessing a capital reallocation from legacy projects like Monero to more adaptable solutions like Zcash and COTI. While Zcash's institutional adoption and regulatory-friendly design justify its premium, COTI's focus on enterprise-grade privacy and scalability offers a compelling long-term play.

For investors, the key is to balance exposure between established leaders and undervalued innovators. Zcash's $9.41 billion market cap and surging on-chain activity, as reported in the Coinotag report, make it a core holding, while COTI's $0.27–$1.25 price range and 3,000x speed advantage, as highlighted in the COTI post, present a high-conviction opportunity. As the sector matures, projects that bridge privacy with regulatory compliance-like COTI-are likely to outperform.

Conclusion

The 2025 bull cycle has redefined the privacy-coin landscape, with Zcash leading the charge and COTI emerging as a sleeper contender. While Zcash's market dominance is well-justified, COTI's innovative use of garbled circuits and EVM compatibility positions it as a long-term infrastructure play. For investors seeking to capitalize on capital rotation and undervaluation, COTI offers a unique blend of technological differentiation and growth potential.