ZEC, DASH Surge Over 16%. Privacy Coins Lead Market, Can This Rally Still Be Chased?

TradingKey - ZEC and DASH prices surge, boosting the privacy coin sector broadly; can this rally be sustained?

On May 21, the privacy coin sector surged nearly 5%, with total market capitalization approaching $63 billion; 24-hour trading volume spiked approximately 24% to reach $4.7 billion. Among them, Zcash ( ZEC) and Dash (DASH) both surged over 16%, breaking above $670 and $50, respectively. Meanwhile, Monero (XMR), which had been underperforming recently, also rose over 2%, returning above $400.

Top 10 Privacy Coins by Market Cap, Source: CoinMarketCap

The collective strength of privacy coins leading the overall cryptocurrency market is primarily due to the robust performance of ZEC. Between February and March this year, ZEC experienced a two-month period of volatility before breaking through the $280 resistance level in April. It has since continued to rebound strongly, with a cumulative recovery of over 255% from its lows. This powerful rally in ZEC is attributed, on one hand, to the Zcash Foundation's extremely healthy finances, and on the other hand, to the fact that over 30% of the ZEC supply is locked in privacy shielded pools, with Grayscale Trust locking up another significant portion, resulting in extremely low actual circulating supply in the secondary market.

ZEC Price Chart, Source: TradingView

In addition to ZEC supporting the privacy coin sector, the implementation of Dash's May technical upgrade and its cross-chain ecosystem expansion also added momentum. According to the official roadmap, DASH abandoned its CoinJoin mixing model in May and integrated the Zcash Orchard privacy shielded pool to address regulatory requirements. Furthermore, Aurora, the Ethereum-compatible layer of the NEAR ecosystem, introduced DASH into its Intents smart components, a move that enhanced DASH's liquidity and utility value.

It was precisely the positive financial outlook for Zcash and Dash's compliance-focused technical upgrades that caused capital to form a strong sectoral resonance in a short period, igniting the entire privacy sector. However, can this rally be sustained? As the leader of privacy coins, ZEC's price is only about 10% away from last year's high of $750. Selling pressure from profit-takers and trapped investors could emerge at any time, potentially dragging the entire sector into a correction. This also implies that the risk of chasing the rally at this moment is high.