Privacy tokens cap dominant Q4 2025 defying negative headwind

In the last quarter of 2025, privacy-focused cryptocurrencies witnessed a significant surge in performance and market capitalization dominance within the sector. 

This change in investors’ attitude has seen the sector defy broader crypto market headwinds, including volatility, pullbacks in major assets like Bitcoin and Ethereum, and ongoing regulatory scrutiny.

Why are privacy coins surging despite market downturn?

This year was good for privacy, but next year is projected to be better. In 2025, some coins that fell under the banner of privacy performed exceptionally well, often outperforming Bitcoin, Ethereum, and most altcoins, especially in the final quarter.

Q4 2025 marked a pause in crypto’s momentum, which saw markets digesting earlier gains and recalibrating expectations for the year ahead. However, while returns were negative across all six crypto sectors for the quarter, following gains across all market segments in Q3, privacy-related assets outperformed. 

This is especially true for the decentralized digital currency Zcash (ZEC), which saw massive gains pushing it to surpass Monero briefly in market cap. As blockchains continue to integrate more deeply into traditional finance, the need for better privacy tools is becoming more obvious, which is why experts think 2026 could be even better for privacy coins. 

According to Grayscale data, the list of top 20 performers in Q4 includes several privacy-related tokens, including Zcash (ZEC), Monero (XMR), Dash (DASH), Decred (DCR), Basic Attention Token (BAT), and Beldex (BDX). 

Tokens that fall in this theme dominated in mindshare, which suggests that price performance was driven at least partially by strength in narrative momentum. This coincided with rising usage across several privacy networks, including Zcash and Dash.

Outside of the privacy theme, the top 20 also featured a minute number of protocols linked with the AI theme, including Alchemist, a Solana-based no-code tooling platform for developers to create apps and games; OriginTrail, a decentralized knowledge graph for AI-based knowledge sharing; and Golem, a decentralized computing network.

What are crypto investors worried about going into 2026?

As the industry prepares to say goodbye to 2025, Grayscale claims there are two themes that have been dominating debates among crypto investors. These debates highlight the regulatory and technological landscape informing crypto markets heading into 2026.

The first is the market structure legislation in the U.S. Congress, and the second is the vulnerability of traditional cryptographic methods to quantum computing.

Grayscale expects a bipartisan crypto market structure bill to become law in 2026. The House already passed its version of this legislation in July — known as the Clarity Act — and the Senate has since taken up its own process. 

There are still many links to be worked out, but broadly speaking, the legislation provides a traditional finance rulebook for crypto capital markets, including registration and disclosure requirements, classifications of crypto assets, and rules for insiders. 

In practice, a more complete regulatory framework for crypto assets across the U.S. and other major economies could alter the way regulated financial services firms report digital assets on balance sheets and encourage them to start transacting on the blockchain. 

As for the topic of quantum vulnerability, analysts at Grayscale expect the topic will generate a lot of debate, but all that talk is unlikely to move prices, they say. 

“If technical progress on quantum computing continues, most blockchains will eventually require updates to their cryptography,” Grayscale has pointed out. 

In theory, a sufficiently powerful quantum computer could derive private keys from public keys, which could then be used to create valid digital signatures to spend users’ coins. This means Bitcoin and most other blockchains — and virtually everything else in the economy that uses cryptography — will ultimately need to be updated for post-quantum tools. 

Grayscale says the risks currently appear far off. However, it is possible for markets to begin evaluating blockchains on the basis of their ability to address the quantum challenge when it arrives.

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