The cryptocurrency sector is experiencing a strong recovery today, with many major tokens seeing healthy price gains. Monero (Cryptocurrency: XMR) One of the top 50 tokens by market cap is skyrocketing today.
As of 3:30 PM ET, Monero is up 25.1% in the past 24 hours, a move that appears to reflect a partial recovery trade from yesterday's delisting crash. Binance The company announced that Monero and three other tokens would be delisted on February 20, leading to a steep drop in those tokens. Following the news, Monero crashed by over 32% in a single day yesterday.
Let’s take a closer look at what’s driving Monero’s recovery today.
How bad will this delisting be for Monero?
This delisting will certainly have a negative impact on Monero's short-term supply and demand fundamentals, as Binance is the world's leading cryptocurrency exchange, at least in most jurisdictions. As withdrawals of Monero tokens will not be accepted after May 20, investors may quickly pull their funds out of Binance and convert Monero into stablecoins to withdraw, leading to strong selling pressure in the short term.
Monero's status as a top privacy coin appears to be a key reason behind the delisting. Binance commented on the reasons for the delisting:[w]If a coin or token no longer meets these standards or the industry changes, we may conduct a more detailed review and potentially delist it.” Regulatory concerns that privacy tokens may hide the identities of buyers and sellers in a transaction have led some cryptocurrency exchanges to scrutinize the tokens more closely.
That said, given Monero’s backlash today, it appears that many in the market still believe in the fundamental value of the cryptocurrency as a privacy-focused payments network.
Is Monero worth buying on the dip?
In my view, privacy tokens make sense for a few specific reasons: In a cryptocurrency world where all transactions are publicly available on the blockchain and easily verifiable, companies that transact using cryptocurrencies may not want their suppliers or customers to know how much they are paying in input costs or how much they are charging on the backend; for example, healthcare or finance companies may not want to store their data on a blockchain outside of a privacy-focused network due to their own use cases or other regulatory reasons.
That said, the delisting reminds investors of the regulatory risks that come with investing in privacy coins. While today's rally is welcome, I believe the jury is still out on the market's valuation of this coin. For now, I will be keeping a close eye on Monero and will be sure to provide updates on the token as the market balances in a precarious fashion over the coming days.
Should I invest $1,000 in Monero right now?
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Chris McDonald has no position in any of the stocks mentioned. The Motley Fool recommends Monero. The Motley Fool has a disclosure policy.
The story behind Monero's astounding 25% rally today was originally published by The Motley Fool.
