Monero Experiences 15% Dive - Yet Reasons Suggest Possible Temporary Slump
Monero [XMR] Price Analysis: Holding the $331 Support
In the cryptocurrency market, Monero [XMR] witnessed a 15.15% drop over the past 24 hours, erasing most of its May gains and testing the key support at $331. This decline brought the monthly gain down to merely 17%.
While bullish sentiment from spot and derivatives market investors is emerging, the bearish pressure remains potent. An immediate rally is not guaranteed, as the strong bearish sentiment hinders the potential for an upward move.
The $331 support level is of significant importance, as a breakdown could trigger further declines. In the daily chart, XMR dropped to $331, aligned with the 50% Fibonacci retracement. However, the probability of this level holding is questionable given the recent price action.
In the past three days, the price has broken through previous support levels, erasing market gains from the past two weeks. If this level fails, XMR may drop to a fair value gap (FVG) demand zone on the chart, where it could find sufficient buying pressure to bounce back. Our analysis indicates that XMR still has the potential to rally from this level.
Despite the sell-off, some market participants have been buying the dip. In the spot market, traders accumulated around $1.59 million worth of XMR. These purchased tokens have been moved into private wallets for long-term holding. If the volume of purchases continues to increase and the assets remain in private wallets, XMR could maintain upward momentum.
The Open Interest-Weighted Funding Rate in the derivatives market is also rising, suggesting most new and existing contracts come from retail investors betting on a rally. However, going long at this point could trigger notable long liquidations if stop losses are hit at the current levels.
Technical indicators remain bearish, suggesting a price drop is likely. The Bollinger Bands (BB) have shown that XMR has breached the mid-band, typically acting as support. This breach implies that bearish momentum is strong, and the asset could fall toward the lower band. The lower band coincides with the demand zone marked on XMR's daily chart, and the Average Directional Index (ADX) currently reads 67.22, confirming a strong market trend and implying a continued downtrend.
In conclusion, holding the $331 support is crucial for preventing further declines. If the price drops below this point, it could lead to a cascade of selling and a significant correction. If the support holds, it could stabilize the price and potentially allow for a rebound, especially if the broader market sentiment remains positive for privacy-focused cryptocurrencies like Monero.
The bearish pressure in the cryptocurrency market raises questions about the ability of the Monero [XMR] price to hold the $331 support, which could potentially trigger further declines. An increase in buying activity, as seen in the spot market where traders accumulated tokens for long-term holding in private wallets, suggests a possible rebound could occur if the support level holds.
