Zcash's 55% Weekly Rally in a Downturn Market: On-Chain Metrics and Privacy-Driven Adoption as Catalysts for Outperformance

In a market defined by volatility and regulatory uncertainty, Zcash (ZEC) has defied the odds, surging 130% in a single week of October 2025 to reach $135.54, according to a Coin-Views report. This outperformance, occurring amid a broader downturn, raises critical questions: What on-chain dynamics and adoption trends are fueling Zcash's resurgence? How does privacy-driven demand intersect with macroeconomic and technological catalysts?

On-Chain Metrics: A Tale of Modest Growth and Volatility

Zcash's on-chain activity in Q3 2025 reveals a mixed picture. While the rolling monthly average of active addresses rose to 1.9k-a 18.75% increase from Q3's start-the figure remains far below the 2018 peak of 12.5k, according to a Sandmark analysis. This suggests limited organic user growth but hints at a core base of engaged participants. Transaction fee volatility further complicates the narrative: spikes to $12, $23, and $29 in March, June, and September 2025, respectively, indicate short-lived demand surges without clear triggers, according to the Sandmark analysis.

The MVRV (Market Value to Realized Value) ratio of 0.918 underscores a bearish sentiment, with most holders still at an unrealized loss, as noted in the Sandmark analysis. Yet, this metric could act as a contrarian indicator if a sustained price recovery attracts profit-taking. Notably, Zcash's on-chain activity remains heavily concentrated in spot trading, with derivatives markets and broader ecosystem engagement lagging, the Sandmark analysis adds.

Privacy-Driven Adoption: A Niche Niche with Explosive Potential

Zcash's core value proposition-shielded transactions-has seen a 15.5% month-on-month increase in October 2025, per the Coin-Views report. This growth, despite regulatory headwinds like the EU's AMLR (2027 privacy token ban), highlights a persistent demand for financial privacy. Partnerships with Zashi CrossPay and Maya Protocol have expanded ZEC's utility, enabling cross-chain private payments and swaps, the Sandmark analysis observes. These integrations suggest a strategic pivot toward interoperability, a critical factor in a fragmented crypto landscape.

The recent surge in shielded transactions aligns with broader macro trends. As institutional investors and DeFi participants seek tools to mitigate surveillance risks, Zcash's zk-SNARK technology-enabling zero-knowledge proofs-has reemerged as a compelling solution, according to the Coin-Views report. This is particularly relevant in 2025, where privacy is increasingly framed as a "hedge" against Bitcoin's regulatory exposure, the Coin-Views report further notes.

External Catalysts: Institutional Entry and FOMO-Driven Liquidity

Zcash's rally has been amplified by external factors. Grayscale's launch of a Zcash fund in October 2025 democratized access for American investors, potentially paving the way for a spot ZEC ETF, the Sandmark analysis reports. This move, coupled with rumors of a Coinbase listing, drove daily trading volume to $1.4 billion-a 90% jump-and futures open interest to $350 million, the Sandmark analysis adds.

The DeFi market's resurgence in 2025, with TVL reaching $123.6 billion, is highlighted in a FinancialContent report. Zcash's integration with hardware wallets and platforms like NEAR Intents improved usability, attracting both retail and institutional traders, the Coin-Views report notes. Meanwhile, endorsements from figures like Naval Ravikant and the Token2049 conference in Singapore amplified Zcash's visibility, per the Coin-Views report.

Risks and Regulatory Headwinds: A Double-Edged Sword

Despite these positives, Zcash faces significant challenges. The EU's AMLR, set to ban privacy tokens by 2027, casts a long shadow over its long-term viability, according to the Sandmark analysis. Additionally, technical indicators suggest overbought conditions: Zcash's RSI hit 95, signaling potential short-term corrections to the $150 support level, as reported in the FinancialContent report.

The MVRV ratio's stagnation and active address growth's sluggishness also raise questions about the sustainability of the rally. If the current momentum proves ephemeral, Zcash could face a sharp reevaluation, particularly if macroeconomic conditions deteriorate further.

Conclusion: A Privacy Play in a Privacy-Scarce World

Zcash's 130% weekly surge in October 2025 reflects a confluence of on-chain resilience, privacy-driven adoption, and macroeconomic tailwinds. While its on-chain metrics remain mixed, the 15.5% rise in shielded transactions and strategic partnerships demonstrate a growing demand for privacy-centric solutions. However, regulatory risks and overbought conditions necessitate caution. For investors, Zcash represents a high-risk, high-reward bet on a narrative that-despite its challenges-continues to resonate in an increasingly surveilled financial ecosystem.