Why are large capitals moving towards private cryptocurrencies?

Source: CritpoTendencia Original Title: Why Are Major Capital Flows Moving Toward Private Cryptocurrencies? Original Link: During the first weeks of 2026, the private cryptocurrency sector reached a significant milestone. After nearly five years without new all-time highs, Monero managed to establish a new ATH around $798. Dash saw an increase of over 100% in just a few weeks, and although Zcash experienced declines linked to internal tensions, it still accumulated gains in the last 12 months close to 646%.

Adding to this scenario is the emergence of a new relevant player within the ecosystem: Midnight, which now exceeds $1.000 million in market capitalization.

This series of events highlights a growing capital flow beginning to shift toward privacy-focused alternatives. Below are five factors that could be driving this movement.

Privacy remains one of the best-performing sectors in the last 7 days, but capital is starting to move away from Zcash toward other privacy-centric protocols.

1. Global Regulatory Progress

The implementation of stricter regulations, such as the EU’s DAC8 directive, effective from January 1, 2026, which requires crypto providers to collect tax data from users, indirectly reinforces the privacy narrative.

While clearer regulation encourages institutional participation in the crypto ecosystem, it is also observed that as governments intensify their control and oversight mechanisms, privacy gains increasing strategic value.

More demanding KYC and AML rules, the so-called war on cash, and the development of CBDCs with programmable features—such as expiration dates, negative rates, or spending limits—fuel fears of an increasingly monitored and centralized financial system.

2. Greater Regulatory Clarity for Privacy

On January 14, 2026, a significant event occurred for this sector when the U.S. Securities and Exchange Commission, after a two-year investigation into the Zcash Foundation, announced it would take no coercive action.

Although there is still a long way to go, resolutions like this, combined with regulatory advances in other segments of the crypto ecosystem, benefit privacy-focused projects and begin to generate greater institutional trust.

However, this narrative is still in an early stage of what will likely be a prolonged process filled with tensions.

3. Technical Maturation and Infrastructure Readiness

For years, one of the main barriers to adopting private cryptocurrencies was their technical complexity. However, updates made in 2025 to Monero and Zcash wallets significantly reduced this friction, especially amid increasing regulatory pressure.

Meanwhile, the development of infrastructure based on zero-knowledge proofs, with initiatives like Midnight, raised expectations around privacy as a fundamental layer.

This trend is also reflected in broader ecosystems: the Ethereum Foundation launched in 2025 a dedicated unit solely focused on privacy, while projects like Aleo advanced in ZKP solutions aimed at institutions.

4. Real Demand and Adoption

The increase in active users of mixers like Tornado Cash, the greater number of merchants accepting Dash compared to Monero, and the capital rotation from BTC and ETH toward more regulation-resistant assets suggest that this is not just a speculative narrative but a real expanding demand.

This phenomenon can be explained by the factors above, but also by a deeper shift in institutional perception. Firms like Andreessen Horowitz have indicated that privacy could become one of the main moats of the crypto ecosystem by 2026, driving new ways to capture value.

5. “Secrets as a Service,” a New Crypto Narrative

The “secrets as a service” narrative, presented in a recent report by Andreessen Horowitz, describes the evolution of privacy and the protection of sensitive data as a basic, reusable, and native layer of the internet and blockchain, comparable to the roles played today by cloud storage or digital payment systems.

This trend could translate into increased demand for services such as programmable access rules to data, where it is precisely defined who can see certain information, under what conditions, and for how long.

Additionally, client-side encryption, where data is encrypted directly on the user’s device before transmission, combined with decentralized key management—eliminating reliance on centralized entities for access control—further supports this shift.

Conclusion

More than a passing trend, the movement of large capital flows toward private cryptocurrencies seems to respond to a structural transformation of the financial and digital environment. As regulation advances, surveillance becomes normalized, and monetary infrastructures become more programmable, privacy ceases to be an ideological value and becomes a strategic asset.

In this context, private cryptocurrencies are not only resistance tools but also the foundation of a new layer of digital services where control of information returns to the individual. If this trend consolidates, privacy could cease to be a controversial niche and become one of the fundamental pillars of the next crypto cycle.