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In just over 4 months in 2021, Monero rose by more than 250 percent on the charts. That is an exceptional gain, equivalent to the gains observed by the market’s other alts. Indeed, the magnitude of Monero’s success between January and the first week of May pushed XMR to a three-year high.
However, at the time of writing, it was a very different tale. As a result of the broader market’s corrections, XMR lost about 60% of its value between May 10 and May 19. While the currency had recovered significantly by the time of publication, it was still trading near its early-April highs.
Understandably, such a drop has sparked a slew of new concerns, including: Will Monero recover?
There is reason to expect that the world’s premier privacy currency will rebound and resume its upward trend on the price charts. While such a forecast is predicated on the assumption that many people anticipate BTC to restart the bull market shortly, other important variables are expected to come into play as well.
The Biden administration’s current taxing plan is the most imminent element that might come into play here. According to a recently released agenda by the United States Treasury, the said plan would force exchanges and custodians to implement stronger reporting regulations to aid in the detection of tax evasion and money laundering.
Now, this isn’t the first rodeo between Monero and the US government. In October last year, for instance, the IRS had floated a million-dollar contract to “break” the privacy coin’s transactions. At the time, Chainalysis and Integra had won the contract on a one-year basis.
However, both of these advances have increased the importance of privacy in the community. The same was seen in XMR’s recent market movement, with the cryptocurrency rising by more than 40% in a 24-hour period following the publishing of the aforementioned agenda. Given the administration’s crypto-skepticism, subsequent tax measures are likely to tighten restrictions on such things even more.
As a result, one might argue that privacy-advertising cryptos like Monero are unlikely to fall out of style very soon.
Updates & developments
Then, there’s the matter of ecosystem-centric developments, with Monero playing host to a set of them since the year 2021 began.
For starters, according to a tweet from earlier in the year, three different teams of developers have been working on trustless atomic swaps between XMR and BTC. One such team, for example, is helping THORChain integrate Monero into its cross-chain decentralized liquidity network. Another team, COMIT Network, launched Monero-Bitcoin atomic swaps on the mainnet just a few days ago.
What’s more, it was also later revealed that Monero’s developers completed an audit of its non-interactive zero-knowledge proof protocol, Bulletproofs.
Finally, there is the issue of institutional interest to consider. In a bull market, the latter indicates that institutions are pushing beyond Bitcoin and Ethereum. Grayscale’s January filing to form a new Monero trust was a step in the right direction in this respect.
Macroeconomic considerations and ecosystem-centric changes, on the other hand, are meaningless unless they stimulate an increase in price performance and real-world adoption. As previously said, the year 2021 has witnessed XMR skyrocket on the charts. But what about its adoption rates?
All talk, no adoption?
According to recent findings by Cryptwerk, for instance, the number of XMR-accepting merchants in the United States has risen from 41 to 950 in less than 3 years. What’s more, in the last year alone, Monero transactions have grown from 10k a day to 23k, with on-chain growth observed to be as high as 208% YoY between April 2020 and April 2021.
With Monero transactions up and Zcash fully shielded txs down in April, there are now 82 times as many Monero txs as Zcash fully shielded and Dash PrivateSend txs COMBINED.
— Justin Ehrenhofer 🏳️🌈 (@JEhrenhofer) May 10, 2021
The same sentiment was shared by Google Trends’ latest finding too. While the keyword Monero noted a figure of just 23 last May, the figure had climbed to an ATH of 100 in April 2021.
Thanks to the aforementioned factors, it isn’t hard to see why price targets and projections for Monero in the short and long term remain high. According to LongForecast, for instance, XMR was predicted to climb as high as $459 by the end of the year, while Wallet Investor pointed to a $470-valuation over the said period. Either way, that would mean XMR going even closer to its ATH.
Here, it’s worth noting that Monero remains strongly correlated with Bitcoin. Ergo, the king coin might have a say too.