Privacy tokens became the prevailing theme in cryptocurrency investments during the fourth quarter of 2025, with Zcash (ZEC) outperforming all other major cryptocurrencies despite generally adverse market conditions that resulted in declining returns across all six crypto sectors, according to Greyscale Research’s latest quarterly report published on December 28. The privacy-centric asset class resisted market forces, even as Bitcoin, Ethereum, and other prominent tokens experienced declines throughout the quarter.
All six cryptocurrency sectors monitored by Greyscale experienced negative returns in Q4 2025, representing a significant reversal from Q3 when each sector achieved positive performance. The Currencies sector outperformed other categories, primarily due to the strong performance of several privacy-focused tokens, including Zcash, Monero (XMR), Dash (DASH), Decred (DCR), Basic Attention Token (BAT), and Beldex (BDX).
Why Did Privacy Tokens Outperform in Q4?
Regulatory Clarity Drives Privacy Infrastructure Demand
Grayscale Research identified privacy as
“the dominant crypto investing theme in Q4,” driven by growing recognition that blockchain integration into traditional finance requires robust privacy infrastructure
“Privacy is a normal part of the financial system: almost everyone has an expectation that their paychecks, taxes, net worth, and spending habits will not be visible on a public ledger,” Grayscale stated in its analysis
Most blockchains are inherently transparent. This creates a growing tension as regulatory clarity improves and public blockchains move closer to the traditional financial system. The need for privacy solutions became more apparent in Q4 as market-structure legislation advanced. In response, investors shifted toward privacy-preserving assets.
Defensive Positioning in Risk-Off Environment
Privacy tokens did better than other tokens because investors were less willing to take risks in the crypto markets. The Artificial Intelligence crypto sector had the worst Q4 returns, which is likely because investors are more sensitive to risk and many of the assets in that category are still new.
In the fourth quarter of 2025, basic blockchain health metrics got worse across the board. For example, total fees on smart contract platforms declined both quarter over quarter and year over year. Active addresses in the Currencies and Smart Contract Platforms sectors also fell. Asset prices and speculative activity dropped as well, particularly in memecoin trading. These trends were consistent with a broader risk-off environment.
Which Privacy Tokens Led Q4 Performance?
Zcash (ZEC): Rising Shielded Transaction Adoption
Zcash led privacy-token performance in Q4, supported by strong growth in the use of its privacy features. The network operates similarly to Bitcoin but adds optional privacy through shielded addresses and transactions. These features obscure the sender, recipient, and transaction details.
Shielded balances increased as a share of total Zcash supply during 2025. This trend points to rising real-world demand for privacy functionality rather than purely speculative activity. Zcash’s Q4 gains also narrowed the market-capitalization gap with Monero, which has historically been the largest privacy-focused cryptocurrency.
Monero (XMR): Stealth Addresses Drive Demand
Monero continued to benefit from structural demand for covert addresses and confidential transaction details. These features make all transactions private by default. Unlike Zcash, which offers optional privacy, Monero enforces privacy at the protocol level. This design attracts users who require guaranteed transaction confidentiality.
Despite Zcash’s robust performance in Q4, which challenged Monero’s longstanding dominance in market share, Monero continues to be the largest privacy-focused asset in cryptocurrency by market capitalisation.
Dash (DASH): Transaction Volume Doubles
Dash saw daily transactions more than double during Q4 2025, supported by its optional PrivateSend functionality that allows users to obscure transaction origins. The transaction volume surge indicated genuine network usage growth beyond speculative price appreciation.
Other Privacy Token Performers
- Decred (DCR): Notable for its sophisticated governance model complemented by CoinShuffle++ privacy enhancements
- Basic Attention Token (BAT): Increased prominence as the Brave Browser ecosystem exceeded 100 million monthly active users, strengthening the demand for privacy-focused digital advertising.
- Beldex (BDX): Featured among Grayscale’s Top 20 performances for Q4, primarily composed of privacy-focused tokens
How Negative Was Q4 2025 Overall?
Broad Market Weakness Across All Sectors
In the fourth quarter of 2025, momentum in crypto markets slowed as investors digested earlier gains and reset expectations. After a broadly positive third quarter, in which all crypto sectors posted gains, returns declined across all six sectors tracked under Grayscale’s framework in Q4.
Given the predominantly adverse market conditions, only a modest subset of assets within specific themes produced favourable risk-adjusted returns. This represented a notable divergence from Q3, when leading performers comprised several large-cap assets such as Ethereum, Solana, Chainlink, BNB, and Avalanche.
Privacy Tokens Led the Top 20 Performer Rankings
The list of top 20 performers in Q4 included several privacy-focused tokens that attracted significant attention. Their price gains were driven in part by strong narrative momentum and rising usage across privacy networks. This concentration of privacy tokens among top performers marked a clear thematic shift from the more diversified leadership seen in the third quarter.
 leading despite negative market conditions across all crypto sectors, according to Grayscale Research analysis.){kind=link}