Zcash (ZEC) staged an impressive reversal Friday, surging 11% and leaving meme coin favorites Dogecoin (DOGE) and Shiba Inu (SHIB) in the dust. But before you get too excited about privacy coins making a comeback, there's a lot going on beneath the surface.

Here's where things stood: Zcash was trading at $434.39 with a $7.15 billion market cap, down 13.3% over the prior week. Dogecoin sat at $0.1397 with a $23.5 billion market cap, up 8% on the week. Shiba Inu clocked in at $0.00008644 with a $5.09 billion market cap and a healthy 14.8% weekly gain.

The Bull Case: Privacy Still Matters

Trader Altcoin Sherpa thinks privacy remains a compelling story, suggesting Zcash could grind back toward the mid-to-high $400s if Bitcoin maintains stability. That said, he's currently sitting flat after taking profits on an earlier position, waiting for either a cleaner technical signal or a better entry point.

The Bear Case: Everything Else

Let's talk about the concerning stuff. Data from Santiment shows Zcash had a monster run in late 2025, with its market cap exploding roughly 15x in under two months. Nice! Except momentum has completely evaporated since then.

Development activity has cratered to its lowest level since 2021, while the price has retraced about 40% over two months. That's historically a nasty combination—when innovation dries up, altcoins tend to underperform.

10x Research piled on with additional red flags, noting ZEC is trading below both its 7-day and 30-day moving averages following a 19.4% weekly decline.

Drama Behind the Scenes

Here's the really wild part: the entire core development team resigned from the Electric Coin Company following a governance dispute. That's not exactly a vote of confidence in the current structure.

The former leaders say they plan to continue working on privacy technology through a new independent firm, which sounds promising in theory. But actions speak louder than words, and about $3.8 million in ZEC has moved from shielded pools to transparent addresses—suggesting some holders aren't sticking around to see how this plays out.

The Rebuild Begins

Zcash creator Josh Swihart announced a new Zcash-focused startup with plans to launch a wallet built from the Zashi codebase, tentatively called "cashZ."

Swihart's pitch is that startups can scale faster than nonprofits, with the ambitious goal of scaling Zcash "to billions of users." Whether that vision can materialize while the core team is scattered and holder confidence appears shaky remains the big question.