As you may know, Monero is one of several “privacy coins” that allow users to maintain their anonymity on the blockchain. In a previous article, I described the importance of privacy when accepting crypto for payment of goods and services as well as paying employees with cryptocurrencies. Article Link: https://sanctuarydex.com/why-privacy-in-payments-is-important/
If you track the price performance of Monero, you have noticed Monero increased in US dollar value by 50% in a 2-week period, while the rest of the top 50 coins were “in the red.”
Why all the recent volatility?
Some would say it has been a “short squeeze” forcing centralized exchanges to purchase Monero from the market to shore up their reserves. Due to the privacy protocol built into Monero, centralized exchanges can sell more Monero than they own. This may be unethical, but it is not illegal. Basically, this is like a short position in Monero, except the exchange did not borrow the Monero before selling it; they simply added digits to their centralized, non-public ledger. This is risky behavior on behalf of the centralized exchanges as unethical activity would be exposed in a “bank run” or rush to withdraw Monero by their investors.
This may have been what happened recently. A post on Reddit called for all Monero owners to remove all their Monero from exchanges starting on April 18th.
Speculators anticipating the “bank run” front-ran the exchanges buying Monero from the market to cover the shorts. Front-running is a term used to describe trading activity before a known event, whether the event occurs or not.
What is next for Monero?
The next code improvements for Monero will result in a “hard fork” on or around July 16th of this year. Based on previous code changes, centralized exchanges will be halting trading and withdrawals of Monero in preparation for the code change and will resume support of Monero once the new blockchain is in a steady state. If you own Monero on an exchange, and you are comfortable with securing your own Monero in a compatible wallet, the new software will be released near the middle of June in support of the new code release. Once your wallet is set up, you can transfer your crypto from the exchange to your wallet. This will ensure you have access when you need it and avoid suspended service from a centralized exchange. For details, you can go to https://www.reddit.com/r/monerosupport/.
The goal of SANCTUARY DEX is to “Make Cryptocurrency Useful”. We currently support Bitcoin, Ethereum, and Dogecoin with plans to add Litecoin and stable coins in the near future.
NOTE: The author does not own Monero nor has plans to purchase it in the next 30 days. This is not a solicitation to purchase Monero.
Author: Stephen Stubblefield, SANCTUARY DEX™ Technical Advisor