Monero has faced a lot of selling pressure over the past month, and the price has plummeted nearly 60% in just four weeks. The rapid decline wiped out several weeks of gains, and XMR now has a clearly falling price.
This development shows that investors' confidence has quickly diminished. Both long-term holders and short-term traders are reducing their positions due to issues in the market.
Monero traders take a step back
Data from the derivatives market shows that many traders are leaving Monero. Open interest has fallen sharply, from about 279 million USD in mid-January to around 118 million USD. This decrease of 57% indicates that fewer are trading on the futures markets, which means less speculation remains for XMR.
Two things mainly explain this decrease. First, many took their profits after previous price increases. Then, the poor market conditions made many lose confidence and exit their positions. Therefore, trading also became thinner.
When activity decreases, the price support weakens. The price then becomes more sensitive to selling pressure and larger fluctuations.
Despite fewer participants now, short-term indicators show that selling pressure may be decreasing. The Money Flow Index shows a positive divergence against the XMR price. The price is still making lower lows, but MFI has made higher lows. This suggests that downward strength is diminishing.
This divergence shows that sellers are losing strength, even if the price has not yet turned upward. Historically, such situations can lead to the price stabilizing or rising slightly in the short term.
The signal does not necessarily mean that the trend is reversing, but XMR may avoid deeper immediate losses if demand stabilizes.
The XMR price is now trying to slowly recover, but there are no signs that the trend is reversing. Monero is currently trading near 326 USD, just below resistance at 335 USD. The price is still within the nearly four-week long downtrend, so there is little room for an increase so far.
It seems difficult to break above 335 USD in this situation. The next major resistance is at 357 USD and could halt the recovery. If no new money or better sentiment comes in, XMR is likely to continue oscillating within this range, while buyers and sellers are cautious.
The risk of a downturn remains if selling pressure increases. A Death Cross may occur if the 200-day EMA crosses above the 50-day EMA. Such a signal usually indicates prolonged weakness. In that case, XMR may fall below 291 USD and slide towards 265 USD or even lower, continuing the decline.