Funds are always flowing, just like water flowing downhill, seeking the path of least resistance. When a top-tier cryptocurrency is caught in a tug-of-war of volatility, the overlooked small sectors are quietly making big profits in the corners.

This week's market movements have been quite painful. Bitcoin has been bouncing back and forth around the $90,000 mark, with each attempt feeling somewhat powerless. Meanwhile, traditional safe-haven assets like gold have hit a historic high of $4,475 per ounce. This situation looks abnormal—digital currencies' safe-haven halo seems to be fading.

Even more outrageous, Ethereum made a slight rebound, but instead of following suit, altcoins not only failed to rally but collectively dove. This inverse movement raises questions—are we already entering the second half of this market cycle?

However, market opportunities never truly disappear; they just appear in turns. The privacy sector's ZEC doubled in value out of nowhere this week, and the storage sector's AR surged by 30% in a single day. Those old-timers who had been lurking in these tracks a month ago are now surely smiling with their eyes squinting.

**Why are privacy coins suddenly so hot?**

In the past week, privacy-related tokens have become the brightest stars in the market. ZEC's weekly increase exceeded 100%, and Monero's performance is also impressive. This rally is fierce, but it’s definitely not out of nowhere.

On one hand, tighter regulations are pushing the real demand for privacy protection. With the US GENIUS Act coming into effect and the EU's MiCA regulations officially taking effect, compliance thresholds for crypto assets are rising continuously. Investors are starting to think about how to maintain their trading privacy while meeting regulatory requirements. This is when privacy solutions come into play.

On the other hand, the tokenization of real-world assets (RWA) is not just a buzzword. As more traditional assets go on-chain, companies and high-net-worth individuals naturally care about transaction privacy. Once stocks, bonds, and property certificates are digitized, the risk of transaction details being exposed becomes apparent. The demand for privacy tools becomes urgent.

From a technological evolution perspective, the underlying protocols of privacy coins are continuously improving, and application scenarios are expanding. Moving from simple anonymous transactions to privacy smart contracts, functionalities are upgrading, and demand naturally rises.

**Why did the storage sector also start moving in sync?**

AR's 30% single-day surge is supported by logical factors. The distributed storage track has recently seen frequent new developments, whether in technological breakthroughs or application deployment, attracting new capital attention. Plus, the macro topics of environmental protection and sustainability remain hot, expanding the ecosystem demand for storage solutions.

**What’s the outlook?**

The characteristic of this sector rotation is—when mainstream coins are volatile, small-cap tokens do not all fall together. Instead, there is clear differentiation, with opportunities emerging simultaneously. Investment logic is shifting from simply holding mainstream coins to thematic investing and sector rotation.

But caution is always necessary. Although the demand for privacy coins is real, regulatory attitudes remain a variable. Europe and the US have never been friendly toward privacy coins, and policy shifts can influence market sentiment at any time. So remember, no matter how tempting the gains, always weigh your risk tolerance carefully.