The digital asset sector is closing out a turbulent quarter marked by losses, strained market infrastructure and investor disappointment. But one nook of the market stood out: privacy-focused cryptocurrencies.
Based on Grayscale’s newest quarterly market abstract, privateness emerged as an sudden funding theme within the fourth quarter, with property comparable to Zcash (ZEC) considerably outperforming the broader crypto market.
Zcash’s worth surged within the fourth quarter, rising from about $50 in mid-September to a peak close to $700 by mid-November, CoinMarketCap knowledge reveals.
The efficiency coincided with a pointy enhance in Zcash’s use of shielded addresses, which conceal transaction particulars such because the sender, recipient and quantity.
Different privacy-preserving cryptocurrencies additionally posted relative positive aspects throughout the quarter, together with long-established tasks comparable to Monero (XMR) and Sprint (DASH), underscoring renewed investor curiosity in confidentiality-focused blockchains.
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Defensive positioning in privateness?
Grayscale partially attributed the sudden surge in privacy-focused cryptocurrencies to what it described as “extra defensive positioning inside crypto markets.”
In Grayscale’s sector framework, these privateness tokens fall beneath the “Currencies” subsector, which incorporates property primarily used as mediums of trade or shops of worth relatively than software platforms.
Whereas the Currencies subsector declined greater than 15% throughout the quarter, it nonetheless considerably outperformed different segments, together with financials, sensible contract platforms, client and tradition, and synthetic intelligence.
Traditionally, defensive positioning inside crypto markets has usually centered on Bitcoin (BTC), which some traders have considered as a type of digital gold during times of macroeconomic uncertainty. Lately, nonetheless, Bitcoin has tended to commerce extra carefully in keeping with broader fairness markets, notably know-how shares.
That relationship confirmed indicators of pressure within the fourth quarter, as correlations weakened amid structural stress throughout the crypto sector, together with the Oct. 10 marketwide liquidation occasion, which analysts have characterised as a “managed deleveraging.”
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