Privacy-focused cryptocurrencies experienced a significant climb despite a broader market downturn that saw nearly $1 billion in positions liquidated. Analysts attribute this surge to increasing regulatory pressures and the ongoing issue of laundering activity.
Monero (XMR) rose by 8.3%, while Dash (DASH) gained 1.9% over a 24-hour period. The privacy coin category as a whole saw a daily increase of 4% and a weekly rise of 13.1%, according to data from CoinGecko.
In contrast, Bitcoin (BTC) dropped by 2.3%, and most other altcoins experienced declines ranging from 3% to 10% during the same timeframe.
DUSK, another privacy token, led the smaller-cap privacy coins with a remarkable surge of 118% in the last 24 hours and a 354% increase over the week.
Key Developments Driving the Rally
The upward momentum in privacy coins appears to have been amplified following an alert from on-chain investigator ZachXBT. ZachXBT flagged a significant theft involving $282 million, where attackers reportedly converted stolen Bitcoin and Litecoin into Monero through multiple instant exchanges.
This substantial volume of conversion is believed to have pushed Monero's price to an all-time high, reaching close to $798 on Thursday before settling back to approximately $644.
Dash is currently trading at $81.61, marking an impressive 119% weekly gain. This rise follows a recent partnership with Alchemy Pay, which has expanded fiat on-ramp access for Dash in 173 countries.
Zcash (ZEC) proved to be an outlier in the privacy coin sector, experiencing a decline of 6.8% daily and 6% weekly. This downturn occurred shortly after the entire development team of the Electric Coin Company resigned on January 7, citing "constructive discharge" by the board.
Market Dynamics and Regulatory Influence
Rachel Lin, CEO of SynFutures, observed a "broader re-rating happening across the privacy sector." She highlighted that intensifying global regulations and increased requirements for on-chain surveillance are key drivers behind this trend.
The European Union's DAC8 directive, which mandated crypto service providers to collect user tax data starting January 1, has reportedly reignited demand for privacy features. Concurrently, Dubai's financial regulator has explicitly banned privacy tokens from trading, promotion, and derivatives.
"Privacy coins tend to move counter-cyclically during periods of heightened uncertainty," commented Shivam Thakral, CEO of Indian exchange BuyUCoin. He suggested that this movement reflects defensive positioning rather than purely speculative excess.
The current rally also appears to be fueled by a capital rotation away from less favored privacy coins like Zcash towards decentralized alternatives such as Monero and Dash. Since January 1, 14 out of 18 privacy tokens with a market capitalization exceeding $100 million have posted gains.