ZEC once prided itself on "absolute privacy," but this protective shield is being pierced. Recently, an on-chain analysis platform launched an algorithmic tool that can now identify over half of ZEC transactions, and nearly half of the sending and receiving addresses have been linked to real users. This means that those who thought they were anonymous on the blockchain are not as private as they imagined—ZEC's appeal as a safe haven asset has consequently been significantly diminished.

The fact that the technology has been cracked is not the biggest headache. Global regulators are becoming increasingly tough on privacy coins. Although ZEC's use of zk-SNARKs zero-knowledge proof technology is considered advanced in cryptography, it is precisely this anonymity that has become a thorn in the side within the anti-money laundering compliance framework. Many mainstream exchanges have begun to restrict ZEC trading pairs, and institutional funds are also retreating due to compliance considerations.

Privacy coins are being squeezed from both technological and policy fronts. ZEC needs to find a new narrative, or it will only become a niche asset.