Monero’s price bubble has popped, the value tumbling as investors scramble to get out.
Recently the rising star of the cryptocurrency world, the coin’s incredible growth spurt has reversed, causing the price to plummet and the coin to lose its coveted top-five status.
The privacy-focused cryptocurrency, with a strong underground following but far from the top ten, experienced a significant price surge this summer, growing in value tenfold over the course of just three months, the vast majority of that over just a few weeks. At its peak, Monero claimed a $170 million market cap, pushing the currency into the top five.
Now, Monero has lost over $70 million of that value, $43 million of which disappeared over the last week alone. Investors are divesting so fast that its 24-hour volume is second only to Bitcoin, beating out both Ethereum and Ripple. XMR has dropped below Ethereum Classic, removing it from the top five and bringing it within striking distance of Dash if the trend continues.
Monero’s price bubble likely the result of a hype cycle
While it enjoyed steady growth for some time, Monero’s price surged this summer. According to market data pulled by BraveNewCoin, its value began to steadily increase following the Bitfinex hack, though this correlation is too weak to imply causation. Then, both preceding and immediately following integrations with several key dark market players including AlphaBay, the price of XMR hit an astronomical rise as the hype cycle reached its peak. Now that the hype has relatively faded, however, its value is correcting, returning to a level more accurately reflective of market demand.
Despite the price tumble, Monero promises to continue on as a privacy favorite
In spite of this corrective setback, however, Monero likely will not be going anywhere. Dark market integrations allowed the privacy-centric coin to take over Bitcoin’s initial user base, a captive audience seeking to engage in illegal or unsavory trades while maintaining both privacy and efficiency. Both Dash and Monero are experiencing a growth of cash-buying options, meaning that both will be able to further distance themselves from Bitcoin’s relative security shortcomings.
The US government continues to crack down on so-called “dirty money,” resulting in an increase in demand for tax havens, meaning that Monero’s primary offering of absolutely privacy is not something that will go out of style anytime soon.