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The privacy-focused cryptocurrency Monero [XMR] experienced a dramatic price surge followed by a sharp correction in the last 24 hours, leaving investors reeling. Initially, XMR witnessed a staggering 50% increase in its value, fueled by substantial liquidity flows. However, this rally proved short-lived, with the coin subsequently plummeting by 17%.
Analysis from AMBCrypto suggests that this volatile price action lacked fundamental support, indicating potential further losses for the asset. The sudden upward momentum appears to be linked to significant fund movements traced by on-chain analyst ZachXBT. According to his findings, a suspicious address, allegedly connected to a hacker, transferred 3,520 Bitcoins, valued at approximately $330.7 million, through various exchanges and converted them into Monero. This massive influx of capital triggered the rapid price inflation.
Technical Indicators Point Towards Further Downside for XMR
Despite the initial price spike and a 3,200% surge in trading volume, market sentiment, as indicated by the OI-weighted funding rate, reveals a lack of confidence among derivatives traders. This metric sharply declined to its lowest point this year, suggesting a willingness to bet against Monero. A high number of sell contracts typically exerts downward pressure on an asset’s price.
Further reinforcing this bearish outlook are technical indicators. The Relative Strength Index (RSI) surged to an overbought reading of 83.67, well above the critical 70 threshold, signaling that XMR may be due for a correction. Similarly, the Chaikin Money Flow (CMF), which measures buying and selling pressure, has shown increasing dominance by sellers, evidenced by its drop from 0.34 to 0.22.
Key Support Levels to Watch as Monero Corrects
Having encountered resistance at the $284.88 mark, Monero’s price is currently trending downwards. AMBCrypto’s analysis suggests that the altcoin could potentially fall to the $231.96 level, where it might find some support and potentially initiate a rebound.
However, if XMR breaches this $231.96 support, further decline towards the lower support level at $199.40 becomes likely. This lower level lies within the consolidation range the cryptocurrency recently broke out of. Given the current market dynamics and the lack of fundamental backing for the recent rally, investors considering purchasing XMR at this point should be aware of the significant risk of further price depreciation.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: Why is Monero (XMR) Up 50%? A $330M Bitcoin Theft May Be the Cause
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
