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Monero has faced intense selling pressure in the past month, with the price collapsing by around 60% in just four weeks. This sharp decline erased the gains of the past few weeks and pushed XMR into a sustained downtrend.
The move suggests investor confidence is on the wane as long-term asset holders and short-term traders reduce their risk exposure amid broader market pressures.
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Monero traders are on the decline
Derivatives data indicates a clear exit for traders from Monero. Open interest fell sharply, from about $279 million in mid-January to about $118 million. This decrease of 57% reflects a reduced participation in futures markets, which indicates a decrease in speculative interest in XMR.
Two main factors explain this contraction. First, take the profits after the previous price increase. Second, bearish market conditions undermined trader confidence as participants abandoned financial positions and liquidity decreased.
Low reaction often weakens price support, increasing sensitivity to further selling pressure and volatility.
Despite the decline in participation, short-term momentum indicators suggest that selling pressures may be rising. The Liquidity Flow Index is in the form of an upward divergence For the price of XMR. While the price continues to record lower lows, the Liquidity Flow Index has recorded higher lows, indicating a decrease in downside momentum.
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This gap indicates that the sellers are losing steam, although the price has not yet responded. Historically, these parameters may be preceded by a stabilization phase or short-term recoveries.
Although the signal does not guarantee a reversal, it suggests that XMR can avoid deeper immediate losses if demand stabilizes.
XMR price recovery may be slow
The XMR price is trying to recover gradually but lacks a strong bullish confirmation. At the time of writing, Monero is trading near $326, just below the $335 resistance. The price remains trapped in an almost four-week uptrend, limiting the upside potential at the moment.
Break above $335 looks difficult in the current circumstances. The next major resistance level is near $357, which could limit recovery attempts. Without new inflows or improved sentiment, XMR is likely to continue consolidating in this range as buyers and sellers remain cautious.
The downside risk persists if the downside momentum escalates. What is known as a Death Cross can be formed if the 200-day EMA rises above the 50-day EMA. This often indicates a long-term weakness. In this scenario, XMR could fall below $291 and slide towards $265 or lower, extending the decline.
