By 2026, Zcash and NEAR Protocol are emerging as two of the most robust alternative investments in the cryptocurrency sector. David Hoffman, co-founder of Bankless, indicates that this trend is driven by investors shifting their capital from Bitcoin and Ethereum towards assets that present more appealing return prospects.
Summary
- Hoffman highlights that ZEC has garnered attention as Bitcoin investors diversify into this smaller privacy-centered asset.
- NEAR has emerged as a credible smart contract alternative as traders look for options beyond well-known assets like ETH and SOL.
- Hoffman believes this trend could intensify competition for capital between Bitcoin and Ethereum as investors seek better returns in lesser-known cryptocurrencies.
In a post dated September 23, Hoffman declared ZEC as the latest beneficiary of the “Bitcoin Bid,” with NEAR achieving a similar status among smart contract platforms.
His findings center on the vast wealth present in Bitcoin’s market capitalization, estimated at around $1.7 trillion, while Zcash maintains a significantly lower post-rally valuation. Hoffman argues that even a small allocation from Bitcoin holders to ZEC could lead to substantial buying activity for this smaller asset.
Zcash’s market capitalization reportedly surged to about $26 billion from a much lesser amount, as noted by Hoffman. This increase aligns with a growing interest in privacy features, the potential threats posed by quantum computing, and the asset becoming more accessible due to regulatory changes.
A report by 21Shares from September 22 indicates that the market for privacy coins has expanded dramatically, nearly fivefold over the past year, growing from $6.2 billion to roughly $30 billion. CoinGecko valued this category at approximately $36.9 billion at that time.
Hoffman observes ZEC tapping into Bitcoin’s capital reserves
Hoffman draws similarities between the current ZEC trading landscape and Ethereum’s trajectory in 2021, when ETH soared from a market cap of around $12 billion at its lowest to nearly $554 billion at its peak.
His thesis does not suggest that Bitcoin holders are abandoning BTC altogether; rather, Hoffman suggests that some investors may be diversifying a fraction of their portfolios into ZEC as a protective or complementary investment.
Zcash offers several attractive narratives for this group. The network mirrors Bitcoin’s capped supply of 21 million coins while providing optional transaction privacy via shielded addresses. The long-term implications of quantum computing for current cryptographic practices add another strong rationale for ZEC’s supporters.
Moreover, institutional access to Zcash has advanced. On August 25, Grayscale transitioned its Zcash Trust to the ZCSH spot ETF on NYSE Arca, launching with around $304 million in assets under management. By early September, ZEC had surpassed $1,000 as assets in the fund grew to over $400 million.
Hoffman argues that ZEC’s price increases alone do not fully explain this trend; he emphasizes the significant disparity between Bitcoin and Zcash’s asset pools, suggesting that the potential capital available for migration from Bitcoin greatly exceeds ZEC’s market capitalization.
“There’s $1.7T of BTC out there, and it only takes a very small amount of Bitcoiners to agree that ZEC is valid,” Hoffman wrote.
He highlighted that investors may arrive at this conclusion due to privacy concerns, fears surrounding quantum computing, or a general inclination to hedge their Bitcoin investments.
This viewpoint reflects Hoffman’s reading of the underlying demand rather than clear evidence linking ZEC purchases directly to Bitcoin holders. He acknowledges that very few capital allocators are likely to overlook BTC, ETH, and the broader crypto landscape to invest in ZEC solely based on its fundamentals.
NEAR has been recognized as the smart contract alternative, according to Hoffman
A similar shift in capital may be happening with NEAR Protocol, as per Hoffman, though he believes the sources of that demand are broader.
“I think NEAR has won the ‘smart contract bid’ trophy of 2026,” he remarked.
As of September 24, NEAR was trading at about $4.28, having gained over 60% in the previous week, according to CoinGecko. This upward trend is supported by various developments within the network and its trading environment.
On September 23, NEAR spot trading began on Hyperliquid, featuring a NEAR/USDC market. During that period, perpetual open interest for NEAR on Hyperliquid was around $344 million, with favorable funding rates indicating that long positions were compensating short positions.
Network advancements also bolster NEAR’s narrative for 2026. Throughout the year, the protocol has concentrated its efforts on artificial intelligence, chain abstraction, and autonomous agents.
In July, NEAR launched staking-based AI payments, allowing users to lock up NEAR and earn monthly compute credits for AI services. This system initially supported 43 AI models, enabling users to access confidential inference and autonomous agents without traditional payment systems.
Hoffman notes that the investment supporting NEAR likely comes from a wider array of sources compared to the more focused flow of funds from BTC to ZEC.
Historically, Ethereum has encountered more substantial competition among smart contract networks than Bitcoin has as a store of value, according to Hoffman. With Solana already vying for users, activity, and investor interest, the smart contract space appears more fragmented.
In Hoffman’s view, this distinction implies that NEAR does not solely compete for capital from a specific group, as this source of investment could include traders exploring alternatives to ETH, SOL, and other established smart contract tokens.
Bitcoin and Ethereum face what Hoffman labels as a blue chip dilemma
Hoffman contextualizes the rising interest in ZEC and NEAR within a larger conundrum facing the primary assets in the crypto market.
Investors pursuing significant returns may be less inclined to inject new capital into assets that are already valued in the hundreds of billions or trillions. Smaller networks hold the potential for more opportunities for price appreciation if they capture a substantial share of existing cryptocurrency capital.
Hoffman terms this challenge the “Blue Chip Curse.”
He believes Bitcoin must further establish its role as a credible alternative to gold, while Ethereum needs to address potential factors that could drive another significant reevaluation after years of growth.
This debate unfolds in the context of the overall cryptocurrency market, which remains significantly smaller than the traditional financial landscape. As of September 24, CoinGecko reported the global crypto market capitalization at around $2.96 trillion, with Bitcoin comprising approximately 57% of that amount.
Hoffman asserts that the crypto landscape may continue to produce new success stories, even if BTC and ETH fail to deliver the outstanding returns that investors have enjoyed in previous cycles. He cited emerging projects such as Hyperliquid, Venice, Lighter, Ethena, and Morpho as examples of new products and infrastructures reshaping the industry.
Nonetheless, Hoffman expresses concern about where the economic value generated from this activity will ultimately reside.
He argues that platforms like Robinhood, Coinbase, Apollo, and other traditional brokerage firms might capture part of the value generated by the latest wave of crypto innovations, while the extent to which BTC and ETH will benefit from this remains uncertain.
For the valuation of the industry to undergo considerable growth, Hoffman claims that total crypto market capitalization must eventually increase significantly beyond its current levels. He proposes a market cap of $10 trillion as a feasible target within the current cycle while suggesting that a more expansive growth trajectory may depend on achieving a $30 trillion valuation.
