Up 30% in 1 Month, Is Zcash a Better Buy Than Bitcoin?

Up more than 30% during the past 30 days alone, Zcash (CRYPTO: ZEC) has a few things in its favor right now, including a trend toward privacy projects in the crypto sector and a developer team reshuffle that has sharpened its direction. In contrast, Bitcoin (CRYPTO: BTC) hasn't exactly done much of anything during the same stretch.

Is Zcash the smarter buy right now, or is it just a smaller coin being volatile while the heavyweight catches its breath?

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Zcash's recent run might be picking up again

Zcash and Bitcoin share similar DNA because they have a supply policy that defines a hard cap of 21 million coins, proof-of-work (PoW) mining, and scheduled halvings which make the mining reward smaller. That scarcity design is precisely why the privacy coin's bulls argue that Zcash could follow a Bitcoin-like trajectory over time, as being a scarce store of value is central to what gives a cryptocurrency long-term value.

What sets Zcash apart is its implementation of zero-knowledge (zk) proof technology, which is the basis for its privacy capabilities. Its shielded (private) pool uses zk-SNARKs, a cryptographic method that lets a user prove something is true without revealing any underlying data, such that the network's transactions can settle without broadcasting the sender, receiver, or amount. Understanding the details of how this technology works is less important than recognizing that financial privacy is something that Zcash offers and which nearly all other cryptocurrencies do not. Bitcoin, for example, posts all of its transactions to a public ledger where anyone can snoop on anyone else's business.

Zcash's developer team also just went through a major realignment which will likely be for the better in the long term. In January, the entire team exited from their previous organization, the Electric Coin Company (ECC), to form the Zcash Open Development Lab (ZODL), rebranding the network's flagship wallet and promising a for-profit structure instead of a nonprofit one like before. Still, launching a sleeker wallet app and consolidating the developer team under a new banner doesn't really justify a 30% gain in one month, and it doesn't necessarily imply that any new long-term tailwinds are in play.

The regulatory ceiling will be problematic

Now, let's turn to Bitcoin.

Bitcoin is vastly larger than Zcash by market cap and enjoys widespread institutional adoption that Zcash cannot currently access. Spot Bitcoin ETFs (exchange-traded funds), corporate treasury buyers, and mainstream brokerages all funnel capital into Bitcoin directly and without fanfare.

The parallel infrastructure on the Zcash side simply does not yet exist even in a rudimentary form. If anything, it hasn't even started to dig itself out from regulators around the world banning it or heavily restricting its listing on crypto exchanges, which took years for Bitcoin to accomplish. In fact, Zcash is probably not yet at its nadir as far as its struggles with regulators go, which implies that it faces a very long road to any real adoption by institutional capital, assuming that ever happens.

At least 10 countries now restrict privacy coin access on their licensed exchanges, and the E.U.'s new Anti-Money Laundering Regulation (AMLR) explicitly bans anonymity-enhancing coins like Zcash (as well as its direct competitors) being offered by regulated venues starting in July 2027. Major crypto exchanges, including Binance, Kraken, OKX, and others have delisted privacy coins under regulatory pressure since 2024, though some have ultimately relisted them without serious incident.

Zcash's design allows for its privacy features to be optional from the get-go, and it also allows for limited disclosure of private transactions to third parties, both of which might appease some regulators. But right now, the trend is against the coin traversing the same institutional adoption path that Bitcoin is now far along.

Thus, whether Zcash fits in a well-balanced crypto portfolio depends on your tolerance for regulatory risk, as well as your view on the long-term merits of the privacy thesis. For most long-term holders, Bitcoin is the better purchase because it's much less risky.

In my view, financial privacy is something that people are always going to want, which is why I buy Zcash. But even so, for every $1 I invest in it, you can bet that I've invested $5 into Bitcoin first.

Alex Carchidi has positions in Bitcoin and Zcash. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.