DCG CEO: "As much as 10% of Bitcoin capital will shift to privacy coins"

Barry Silbert, CEO of Digital Currency Group (DCG), forecast that over the next several years, part of the capital currently allocated to Bitcoin will migrate to privacy-focused crypto assets.

According to The Block on the 11th (local time), Silbert said at the 'Bitcoin Investor Week' event in New York, "The scenario we're betting on is that over the next few years, 5% to 10% of Bitcoin will flow into privacy-focused crypto assets."

While he reiterated strong conviction that Bitcoin remains a core holding in a diversified portfolio, he argued that privacy coins have greater potential when it comes to outsized returns.

Silbert said, "Unless the U.S. dollar completely collapses, it's hard for Bitcoin to rise 500-fold," adding, "I think Zcash can rise 500-fold. BitTensor also has 500-fold potential." He added, "Our portfolio is allocated accordingly."

DCG subsidiary Grayscale is a leading pro-Bitcoin player that first launched an institutional Bitcoin investment product in 2013. It is currently operating the Grayscale Bitcoin Trust after converting it into a spot Bitcoin exchange-traded fund (ETF).

Even so, Silbert said, "The early narrative of Bitcoin as anonymous cash is no longer valid," assessing that the emergence of on-chain analytics firms such as Chainalysis and Elliptic has effectively limited Bitcoin's privacy features. He also expressed skepticism about the likelihood that Bitcoin itself will introduce meaningful privacy capabilities.

He emphasized, "People want to use digital money with privacy," adding, "Financial privacy is a fundamental right."

Silbert noted in particular that since Paul Atkins took office as chair of the U.S. Securities and Exchange Commission (SEC), he has felt more comfortable speaking publicly about financial privacy. He said, "My focus right now is privacy," adding, "Privacy is the area I'm paying the most attention to right now."

Meanwhile, Grayscale is pushing a plan to convert the Grayscale Zcash Trust, launched in 2017, into an ETF. In the past, it also operated an investment product for ZEN, the token of the privacy chain Horizen.