Monero Slides Amid Bearish Sentiment and Regulatory Headwinds

• Monero (XMR) is down over 25% from its January 14 peak, driven by heavy long liquidations and declining open interest according to FXStreet.
• Privacy coins, including Monero, are the worst-performing crypto segment, with Artemis data showing a 24% decline over the last week as reported by Phemex.
• Dubai's regulatory restrictions on privacy coins are compounding Monero's bearish technical setup and reducing market access according to AInvest.

Monero's price has dropped significantly in recent weeks, trading below key moving averages and under continued selling pressure according to Bitget. The token is currently at $353.19, trading below the 20-day, 50-day, and 200-day moving averages as data shows. This setup reflects persistent short- and medium-term bearish momentum with limited support nearby. The recent sharp decline in Monero’s price has been supported by heavy derivatives liquidations, with CoinGlass data showing $518,340 in long liquidations over the last 24 hours according to Phemex. These liquidations indicate increased short-side dominance and heightened bearish bias among traders.

The technical indicators for Monero are overwhelmingly bearish. The Moving Average Convergence Divergence (MACD) has remained in negative territory, while the Relative Strength Index (RSI) is at 32, signaling an oversold condition as reported by Bitget. Monero is currently below the 200-day EMA at $387, with the 50-day and 100-day EMAs also sloping downward. A close below $387 could trigger further losses toward the S1 Pivot Point at $318 according to Bitget. On the other hand, a rebound above $387 could offer some relief but would face resistance near the Ichimoku Kijun at $583.05 as noted by AInvest.

The recent short squeeze on Monero brought the price back toward the $490–$500 range on January 31, driven by heavy liquidation of short positions according to Bitget. However, this rebound was limited and did not reverse the broader bearish trend. Derivative positioning data suggests that leverage has largely reset after the short squeeze, with the long/short ratio near 1.063 as Bitget reports. This indicates that neither side is overcrowded, suggesting price is not yet vulnerable to a long-side liquidation cascade.

What Drives Monero's Decline?

Monero's decline is driven by both structural and regulatory factors. On the structural side, the token is facing a bearish technical setup with momentum indicators showing a continuation of the downward trend according to Phemex. The Stochastic RSI and Commodity Channel Index confirm pronounced oversold conditions, while the Bull/Bear Power and Awesome Oscillator also align with the downtrend as AInvest notes. These metrics collectively signal dominance by sellers and a low probability of a recovery in the near term.

Regulatory scrutiny has further exacerbated the situation. Dubai authorities have enacted restrictions on Monero and other privacy coins as part of their regulatory approach to digital assets according to AInvest. These restrictions have limited market access and reinforced challenges for buyers. Despite Monero's advanced privacy features, the regulatory headwinds in key markets like Dubai are making it difficult for the token to attract new capital or stabilize its price.

What Are the Market Implications for Monero?

The broader crypto market is also impacting Monero's performance. The privacy segment has been the least-performing sector, with Artemis data showing a 26.6% drop in the last week, outpacing Ethereum's 26.4% decline according to FXStreet. This indicates that Monero is underperforming even compared to other bearish assets. The decline in Monero's price is also reflected in its derivatives markets. The Open Interest for Monero futures has declined by 5.12% to $135.18 million, reflecting a significant reduction in outstanding futures contracts as Bitget reports. This suggests that traders are withdrawing capital by closing positions or reducing leverage, further supporting the bearish trend.

Despite the bearish technical indicators, some analysts believe that Monero could stabilize in the $340–$370 range as sellers pause. A rebound above $385 could prompt short-term covering, but it faces strong resistance near the Ichimoku Kijun as noted by AInvest. If Monero fails to hold above $385, it could trigger further declines toward long-term support levels. The baseline scenario for Monero remains consolidation beneath $385, with upside scenarios looking unlikely at this stage according to AInvest.

What Is the Outlook for Privacy Coins?

Privacy coins as a segment are facing significant headwinds. Zcash (ZEC), another privacy coin, has also experienced a sharp decline due to macroeconomic fears overshadowing whale accumulation . The market is currently experiencing a classic crypto moment, where short-term sentiment is heavily influenced by macroeconomic uncertainty. Investors are advised to consider both on-chain accumulation signals and broader economic factors when assessing the trajectory of privacy-focused coins .

The decline in privacy coins is also being driven by reduced retail interest and increased long liquidations according to FXStreet. Artemis data show that privacy coins are down 26.6% in the last week, the least-performing crypto sector. This trend is expected to continue unless there is a significant shift in market sentiment or regulatory environment. For now, privacy coins remain under pressure, with further downside potential for both Zcash and Monero.