- XMR’s latest 24-hour spike was driven by a hacker who brought massive liquidity inflows on-chain
- Market sentiment seemed to oppose a long-term rally as several market fundamentals dropped
In the last 24 hours, Monero [XMR] saw massive liquidity flows driving its price up by 50%. Soon after though, the privacy coin’s price fell by 17% on the charts.
AMBCrypto’s analysis of market sentiment revealed that this rally had no fundamental backing, with the asset set to record further market losses too.
Why XMR has taken to the upside
According to ZachXBT, an on-chain analyst, the recent surge in XMR’s price can be traced to a suspicious address that moved funds from BTC to XMR. These addresses, allegedly linked to a hacker, moved 3,520 Bitcoins worth $330.7 million through multiple exchanges and converted them into XMR.
These sudden, massive liquidity inflows induced a market rally, resulting in over a 50% price jump.
At the time of writing, the OI-weighted funding rate, which measures market sentiment based on Open Interest and funding rates, hinted at this. In fact, this metric had fallen sharply to its lowest point of the year – Hitting -0.5757%.
Source: Coinglass
Such a drop is so steep that it is rarely recorded in assets. It also appeared to oppose the 3,200% volume hike. This decline in the derivatives market meant that these traders lack confidence in the asset and may be willing to short it.
When an asset has a high level of sell contracts opened, it tends to pull the price south. Such a downward move is likely, with AMBCrypto finding other confluences supporting it too.
However, AMBCrypto’s analysis also found that this rally is likely temporary as fundamentals might not sustain it.
Technical indicators bounce goes against rally
The Relative Strength Index (RSI), a momentum indicator that shows whether an asset is overbought or oversold based on readings above 70 or below 30, was used for this analysis.
At press time, the RSI had a reading of 83.67, well above the 70-mark, implying that XMR may be overbought and the asset is likely to fall to lower lows.
Source: TradingView
Similarly, the CMF (Chaikin Money Flow), which measures buying and selling pressure over a period by combining price and volume, revealed that sellers have been more dominant.
This happens when there’s a significant drop on the chart. This can be seen in this case with the CMF’s reading falling from 0.34 down to 0.22 within a short period.
However, it’s worth noting that the CMF was in the positive zone. This suggested that theoretically, buying activity could resume and the volume drop might be temporary.
What next for XMR’s price action?
Combined with the overbought RSI reading and growing selling volume, XMR has traded into a resistance zone on the chart at $284.88.
This has forced the asset south, with further decline likely for the privacy coin.
According to AMBCrypto’s price analysis, the altcoin could drop to the $231.96-level, where it may find support for a rebound.
Source: TradingView
In another scenario, if XMR breaches the $231.96-level, the asset is likely to trend towards the lower support at $199.40, within the consolidation range it exited earlier.
Overall, given the market fundamentals, investors purchasing XMR now are likely to witness a significant price decline.