Case for Monero ContinuesTL;DR:
Monero is used as a currency giving it a relatively stable value during all seasons
There has been and will continue to be large transfers of Bitcoin to Monero creating supply shocks and XMRUSD RIPs
I have been heavily focused on sharing my bull case for Monero for over two years now. That made for a very disturbing morning on February 4th, 2024 when I woke up to see KRAKEN:XMRUSD down more than -30%. My first thought was, "oh no... someone cracked its privacy!" Then I read the details; it had been delisted from Binance for "being impossible for government to track and therefor banned in many countries." So... Monero was actually "working as intended." Buy!
There are only 3-4 cryptocurrencies that matters to me: Bitcoin, Monero, and which wins between Ethereum/Solana. These cryptocurrencies represent the established use cases thus far respectively in Store of Value, Currency, and Smart Contracts. I have been writing about Monero for several years now relating my observations about its uses, price performance, and future predictions. Recent events have proven my thesis to be accurate and I am confident will continue to be.
Performance versus Bitcoin:
One criticism of observing recent or past outperformance of BITFINEX:XMRBTC is "zoom out bro" where the full decade plus price trend it noted. This is undeniable. However, one should remember the investing adage: "past performance is not indicative of future results." One should also not be ignorant of the facts leading to extended periods of outperformance and what they mean for future market conditions.
During the crypto winter of 2022 Monero outperformed Bitcoin as a product of Monero holding its value, presumably because of its continued use as a medium of exchange (currency), while Bitcoin fell precipitously.
The same outperformance happened again when Bitcoin had a less dramatic decline in value during 2024. Again, Monero maintained a relatively stable valuation.
Year to Date as a product of Monero's prior stability and the catalyst event (I will talk about later) have driven a period of outperformance yet again.
Store of Value
Bitcoin's use case as a Store of Value is well established. Prior to the last Halvening event Bitcoin was actually MORE inflationary than Monero. Now the inflation rate for Bitcoin and Monero is 0.83% and 1.7% respectively. Monero has an inflation rate known as a "tail emission." The inflation rate actually declines over time as the amount of new Monero being added (432,000 annually) is fixed. There will actually be a point where they are close again around late 2027 when the rates will be 0.83% and 0.82% respectively. As Bitcoin rewards continue to decrease there will never be a point where Monero's inflation is less than Bitcoin's.
However, being inflationary or deflationary alone does not grant or guarantee value. Bitcoin will always hold the title of "most deflationary" between the two. Having limited supply and being scarce is not enough to give something value. Intrinsic value is derived from many potential factors and one that is common between both of them is: use as a medium of exchange. Monero is actually proving to be more used as a medium of exchange.
"Monero is what people think Bitcoin is."
I have been observing over the last two years a shift on the Darknet markets that there are two primary currencies: Bitcoin and Monero. What is interesting is that some Darknet markets have ceased transacting in Bitcoin entirely and rely exclusively on Monero. This is one of the reasons that Monero has maintained its value over this time. The reason is Monero's primary use case: private money. Monero is built upon privacy by default. This is originally what Bitcoin was perceived to be. Now, the public nature of Bitcoin is seen as a value proposition for state and corporate adoption to the benefit of NGU (Number Go Up) but it provides no security for those that value privacy.
"What about Zcash?"
There are other privacy coins, sure. Often times when I talk about Monero these competing coins are brought up in the context of "interesting technology." Tech matters less to use. You can have amazing tech that is worthless if no one uses it. This is analogous to the platform war between Betamax and VHS. Betamax arguably had better technology but the consumer market chose VHS and that became the standard.
As long as Monero "has privacy" then any other cryptocurrency that "has privacy" has only equal use case. What matters then is the market; the consumer. And the market and consumers have already decided to use Monero. The network effect has already taken over. It will be incredibly unlikely that any other privacy coin can reach the same network effect and supplant Monero.
Bitcoin is worthless without state approval
In 2023 and 2024 hackers that had somehow broken into the Darknet market of Silk Road and the Cryptocurrency exchange Bitfinex were captured, prosecuted, deprived of freedom, and forced to surrender their Bitcoin many years after their crimes were committed. We are talking billions of USD worth of Bitcoin that were rendered worthless to their ill gotten owners. What should have been realized then was that all Bitcoin, despite being permissionless, is worthless to its owner without full state approval. You can hold it, send it, and trade it but if government does not approve it will find you and take your freedom. That is, of course, unless you hand it over to them and they might give you some of that freedom back.
So it became rather obvious that should a hacker acquire copious amounts of Bitcoin they would invariable seek to privatize these gains. Just such an event happened in April. Allegedly, a hacker gained access to a very old Bitcoin private key containing nearly $330 million worth of Bitcoin and then proceeded to convert it to Monero irrespective of transaction costs and liquidity. This created an acute supply shock leading to a huge RIP. Many smaller exchanges "ran out" of Monero exacerbating the supply shock and leading to further appreciation.
This is a catalyst that is founded upon rational actions albeit not ethical. We can presume that such catalysts will continue to happen into the future.
Technical Analysis
Monero has been very hard to trade using my standard methods. Because of its normal stability of value it lacks clear and robust trends to play pullbacks. However, there is a definite recent trend to look at now. I am very interested to see where and if Monero establishes a new trading range because then I can look at the lows of this range to accumulate more. The potential 50% Retracement level of the present price action is 292.
Conclusion
During all seasons both bullish and bearish Monero will continue to be used as a medium of exchange and maintain its Store of Value. Monero has already reached adoption level in the use case of privacy which establishes a moat of competitive advantage versus any other privacy coins. As long as humans use cryptocurrency they will value the privacy advantage of Monero versus Bitcoin and periodically and unexpectedly convert between the two leading to huge supply and price shocks.
