Monero (XMR), long viewed as one of the most private privacy coins, has dominated the privacy space since its creation in 2014. Currently, it’s the tenth largest cryptocurrency by market cap, with a $1.7B valuation. It reached this height without a founder’s reward, like many other privacy coins, and is instead completely funded by the community.
Although Monero seems like a great investment, there have been two problems daunting investors. The first is that Monero was not supported by popular hardware wallets, such as the Ledger Nano S. This was fixed earlier this year, but the second issue still remained: transaction fees. Due to its design, Monero transactions use much more data than other cryptocurrencies. This increase in data use means that transactions cost much more than the competition.
Below, you can see how Monero transactions used to cost as much as (if not more than) Bitcoin transactions. Considering that Bitcoin’s network sees much more traffic, one would think that Monero transactions would be less expensive. However, as discussed, Monero’s privacy features require additional bandwidth to mask user data, making it more costly to use than Bitcoin.
Although Monero has been considered expensive, transaction fees have recently disappeared. This is thanks to Bulletproofs, a new proofing function launched on October 18, 2018. Without getting into the technical details, Bulletproofs allows Monero transactions to be 86% smaller, causing the transaction fees to drop. Coinmetrics shows how much transaction size has decreased:
This upgrade now means that Monero has successfully climbed over two major hurdles to adoption. Users can store XMR on their hardware wallets, and they can also transact at insanely cheap costs. Monero is so cheap, it’s now less expensive to use than Bitcoin, Ethereum, and Litecoin:
Athough this news is seen as extremely bullish for Monero, the market has not responded well. Since the launch on October 18, the price of Monero has barely budged. It climbed up a dollar or two after the hard fork, but has since declined to its pre-Bulletproofs price:
XMR/USD, From CryptoCompare
This makes traders wonder why the price of Monero hasn’t increased. Fundamentally, this is seen as extremely positive news for XMR, so here’s two explanations for why the price hasn’t moved:
#1 - Priced In
The Bulletproofs upgrade has been under development for a while. Users of Monero knew that transaction costs were high, and that Bulletproofs was a necessary upgrade. This could mean that anyone who would buy Monero today already knew about the hard fork, and there bought months ago in anticipation for this upgrade. Bulletproofs are “priced in,” meaning that any price movement has already been baked into its valuation.
#2 - Low Volatility & Volume
Across the entire cryptocurrency market, volatility is nearing all-time lows. Most assets are barely moving. Outside of last week’s Tether drama, Bitcoin has barely moved, instead choosing to range between $6,200 and $6,600.
BTC-USD, from CryptoCompare
This lack of volatility could be what’s preventing Monero’s price from gaining ground. If Bulletproofs were introduced during a bull market, the price could see much more positive traction. Additionally, trading volumes are down across the board. This could mean that even though Monero’s upgrade is awesome for users, no on else seems to be interested in buying.