Investors turn to DUSK after privacy coins rally

Investors interested in privacy coins show signs of low market-cap turning to altcoins. This shift occurs because many believe that multi-billion dollar projects like XMR and DASH are overstuffed. One candidate that deserves attention is DUSK.

What advantages make DUSK attractive to investors? What do the information signs on the chain warn about? The next topic explores these questions in detail.

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The dusk (DUSK) counters the market, sounding more than 4x in January

On January 19, when Bitcoin fell 3% to $93,000 and many altcoins fell 5-10%, DUSK rose 40% to $0.22. This marked the highest level since January 2025.

DUSK has more than quadrupled since the beginning of the year. Arkham's data on DUSK's trading volume shows that volume surpassed $1.4 billion last week. This was the highest level last year.

According to CoinGecko, at the time of writing, the altcoin is in the Top 4 by 24-hour trading volume, followed only by ZEC, XMR and DASH. The sharp increase in business volume suggests that DUSK is attracting strong retail demand.

Two key factors driving DUSK's price increase

The first reason lies in the intrinsic value of DUSK. Its key strength comes from advanced encryption technology. DUSK uses zero-knowledge proofs (ZK proofs) and zk-SNARKs to hide transaction details while still allowing regulators to access important information.

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While altcoins like XMR can face legal challenges due to their complete anonymity, even for administrators, DUSK takes a different approach. This approach doesn't necessarily satisfy privacy fanatics, but it aims to strike a balance.

Investor Paxton explained that while businesses want privacy, regulators want transparency. Evening puts himself in the middle.

“Private by default, accountable when needed. DUSK encrypted transfers hide the sender and amount from the public, while the recipient can still verify who paid them — and cryptographically. That missing piece makes privacy at night more travel-friendly and compliant.” – said Hein Dauven, CTO of the Dusk Foundation.

The second reason is more external. Investors believe the big privacy coins will offer some upside after strong rallies. As a result, capital flows into small-cap privatization projects. DUSK's current market capitalization is just over $100 million.

Potential risks of data signals on the chain

Despite a strong rally, the price may face risks after a four-fold increase. On-chain exchange flow data provides a warning signal from Arkham.

This data reflects the volume of DUSK flowing into and out of exchanges. On January 16-17, the exchange's revenue increased to more than 6 million DUSK per day. This marked the highest level in the last 30 days. The data suggests that early investors may take profits after the recent rally.

Additionally, capital turning to lower market-cap altcoins in the same narrative often signals that a cycle is nearing its end. Coupled with the return of fear sentiment in the third week of January, this trend could increase concerns for investors tracking DUSK at current levels.