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Monero Price Analysis – Consensus algorithm change slated for October

Pending a successful audit, the network will drastically change its consensus algorithm from CryptoNight to Random X this coming October, in a bid to remove ASICs from the network permanently.

Created in April 2014, Monero (XMR) is classified as a privacy coin due to untraceable, unlinkable, private, and analysis resistant transactions. The cryptocurrency is now down 76% from the all-time high of nearly $500, established in December 2017. The market cap currently stands at US$1.55 billion, ranking XMR 12th on the Brave New Coin market cap table, with US$89.88 million in trading volume over the past 24 hours.

XMR’s default privacy features leverage Multilayered Linkable Spontaneous Anonymous Group signatures (MLSAG), ring confidential transactions (RCT), and stealth addresses. Other coins with the optional ability to send private transactions include Zcash (ZEC), DASH (DASH), PIVX (PIVX), which use Zero-Knowledge proofs or CoinJoin.

MLSAG signatures, as used by Shen Noether’s RCT, are based on Gregory Maxwell’s Confidential Transactions, and Nicolas van Saberhagen’s Ring Signatures. Ring signatures allow any member of a group to produce a signature on behalf of the group, without revealing the individual signer’s identity. RCT was initially implemented on XMR in January 2017 and improves upon ring signatures by allowing hidden transaction amounts, origins, and destinations with reasonable efficiency and verifiably trustless coin generation. The stealth address feature allows for single-use addresses which only reveal where a payment was sent to the sender and receiver. A multi-signature wallet function was also implemented in April 2018.

Monero Price Analysis 14 June 2019 (1)

There are also two key XMR-related protocols in development, Tari and Kovri. Tari was announced in May 2018 and will introduce token creation, in a similar fashion to Colored Coins on Bitcoin, ERC20 tokens on Ethereum, and non-fungible tokens (NFTs) in general. Kovri has features that are similar to The Onion Router (Tor), and is currently in pre-alpha. Kovri will add additional user privacy by anonymizing geographical locations and IP addresses with an overlay network. Initially, Kovri will be implemented in the official XMR wallet. Eventually, all future XMR transactions will be routed through Kovri.

XMR’s transactional privacy features have attracted increased mining malware and ransomware operators over the past few years. A report released in January 2019 found that nearly 5% of all XMR in existence was created by crypto mining malware. In response to the persistent and ongoing use of malicious software, the XMR community created a website to help users affected by these problems, including information for diagnosing and removing the malicious software.

There have also been several malware variants affecting different operating systems. KingMiner, targeting Windows servers, was discovered in June 2018 and likely accounted for an 86% increase in cryptojacking throughout Q2 2018, as reported by McAfee labs. Linux.BtcMine.174, which targeted old Linux operating systems, was discovered in November 2018. Mining malware affecting cloud providers using Linux was discovered in January by Palo Alto Networks Unit 42.

Trend Micro has discovered a significant uptick in XMR-related mining malware over the past year. This includes two mining malware variants affecting Windows servers, RADMIN and MIMIKATZ, and Linux malware Coinminer.Linux.MALXMR.UWEIU which eliminates any competing malware on the infected machine. The security analysts also detected a URL spreading a botnet with an XMR miner bundled with a Perl-based backdoor component this week. The Perl-based backdoor component is capable of launching distributed denial-of-service (DDoS) attacks, allowing the cybercriminals to monetize their botnet through cryptocurrency mining and by offering DDoS-for-hire services. Most of the infection attempts thus far have been in China.

Because of XMR’s transactional privacy and use in these malware attacks, there are ongoing concerns around governmental attempts to declare a ban on XMR usage. Japanese and U.S. governments have expressed interest in “legislative or regulatory actions” to prevent the use of privacy focused cryptocurrencies, such as XMR and ZEC, for illicit purposes.

In late 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) blacklisted two specific Bitcoin addresses for the first time, both of which had been used for ransomware. This decreases coin fungibility and increases coin surveillance, something not possible with XMR.

In a recent interview, Riccardo Spagni, a member of Monero’s core developer team, felt that the U.S. is unlikely to declare a privacy coin illegal. Spagni believes that privacy coins will remain open to U.S. users as long as Tor remains open. He believes that Zcash, which is managed by a U.S. company, is much more likely to be targeted by U.S. regulators.

On the network side, the XMR community has taken an aggressive approach to regain application specific integrated circuit (ASIC) resistance. Beginning in late 2017, the XMR hashrate began to increase substantially, suggesting stealth ASIC mining. This meant that CPUs and GPUs could no longer efficiently mine XMR. The increased use of ASICs on any chain can mean increased network centralization as less efficient hardware, like GPUs and CPUs, become unprofitable to use, allowing those with more resources to buy more ASICs.

The XMR Proof-of-Work (PoW) algorithm, CryptoNight, had been scheduled for some changes through the use of periodic hard forks, every six months, which would have ideally decreased the use of ASICs on the chain. Future PoW algorithm changes, potentially being released in October 2019, will likely involve a new consensus algorithm, Random X.

Developed over the past year, the Random X algorithm prevents ASIC or GPU mining, focusing instead on CPU-centric mining. A security audit of the algorithm has been successfully funded by the monero community and will be performed by Arweave. The company has recently built a tamper-resistant storage method based on blockchain and cryptocurrency techniques.

The most recent scheduled hard fork occurred on March 9th at block 1,788,000, which implemented Monero Core v0.14.1. The hard fork brought blockchain pruning and improves transaction efficiency, along with an immediate and significant drop in hash rate. A similar drop in hash rate occurred after the hard fork in April 2018, suggesting the possibility of significant ASIC use on the chain.

Another possibility for the significant rise and decline in hash rate may be due to increased mining malware using the now defunct PoW algorithm. The October 2018 hard fork did not see nearly as drastic of a change in the rise and fall of hash rate when compared to the April and March hard forks.

Monero Price Analysis 14 June 2019 (2)

Despite the multiple hard forks, hash rate distribution remains widely varied between six major pools and several smaller and unknown pools. Since the March hard fork, hash rate has stabilized and is not increasing. Based on mining difficulty, overall miner participation is holding at a 17-month low. Although frequent PoW changes decrease ASICs on the chain, as total hash rate drops, risks of a 51% attack increase.

Monero Price Analysis 14 June 2019 (3)

Just over 92% of the 18.4 million XMR has now been mined. XMR has a two-minute targeted block time with a 3.47% annual inflation rate (line, chart below), which is among the lowest of all coins. Instead of the stepwise disinflationary curve that occurs after each Bitcoin block reward halving, XMR has a smoother emission curve until the block reward hits 0.3 XMR per minute, where it will remain indefinitely. This is known as tail emission and ensures a block reward in perpetuity, regardless of transaction fees.

Monero Price Analysis 14 June 2019 (4)

Transactions per day (red line, chart below) recently hit a record high of just over 12,000. Weekly active addresses (red fill, chart below) recently increased to nearly 57,000, marking a new 21-month high. Both transactions per day and active addresses may correlate with the rise and fall of various mining malware activities.

Monero Price Analysis 14 June 2019 (5)

Among all privacy-related coins, XMR has historically led the pack in regards to transaction fees (red, chart below). However, XMR transaction fees are currently higher than ZEC, DASH and PIVX. XMR has more transactions per day than ZEC or PIVX, but fewer than DASH (not shown).

In October 2018, XMR completed a hard fork to implement Bulletproofs, which reduced transaction sizes by 80% and immediately brought average transaction fees down to US$0.027. XMR’s average daily block size is currently higher than ZEC, DASH and PIVX, and has also decreased significantly since the addition of Bulletproofs (not shown).

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Turning to developer activity, XMR currently has 17 repos on GitHub. Most coins use the developer community of GitHub. Files are saved in folders called "repositories," or "repos." Changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity and interest.

In total, over 200 developers have contributed over 3,000 commits in the past year across all repos. Most of these commits have occurred on the main XMR repo (shown below). In January, the XMR wallet and node software Monerujo v1.10.14 was released, allowing for increased privacy obfuscation for where payments are sent and how much is held in the wallet. Monerujo v1.11.7 was released earlier this month with minor improvements.

Monero Price Analysis 14 June 2019 (7)

Exchange traded volume has been led by the Tether (USDT) and Bitcoin (BTC) pairs. The sustained dominance of the BTC trading pair was largely due to the lack of direct fiat gateways for XMR. However, earlier this year, Binance added XMR/BNB and XMR/USDT trading pairs. XMR/BTC margin trading was added to Poloniex on April 24th.

As exchange services like Shapeshift and Changelly now require customers to register for KYC/AML requirements, XMR volume on decentralized exchanges (DEXs) will likely continue to increase. The XMR/BTC pair on Bisq, a peer to peer private DEX, currently accounts for 83.8% of the total exchange volume. In 2018, the U.S. Securities and Exchange Commission announced that DEX owners need to registered as exchanges, which may keep unregistered DEXs out of the U.S. entirely.

In the future, XMR may be delisted from centralized exchanges and relegated to DEXs entirely. Although, in August 2018, XMR was listed as a potential addition to Coinbase. ZEC was added to Coinbase with it’s optional privacy feature disabled. Hardware wallet solutions currently available for XMR include the Trezor Model T and the Ledger Nano S.

Monero Price Analysis 14 June 2019 (8)

Worldwide Google Trends interest regarding the term "Monero" remained sharply down over the course of 2018 and early 2019, and is currently sitting at a multi-year low. A slow rise in searches for "Monero" preceded the bull run in Q4 2017, likely signaling a large swath of new market participants at that time. A 2015 study found a strong correlation between the google trends data and bitcoin price, while a 2017 study concluded that when the U.S. Google "bitcoin" searches increase dramatically, bitcoin price drops.

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Technical Analysis

Since May, XMR and BTC price action have become increasingly correlated, with a 90-day rolling Pearson coefficient of 83%. Both cryptocurrencies are showing signs of a potential local top with an imminent pullback. A roadmap for price can be deduced using exponential moving averages, Pitchforks, Volume, chart patterns, and the Ichimoku Cloud. Further background information on the technical analysis discussed below can be found here.

Monero Price Analysis 14 June 2019 (10)

On the daily chart, the 50-day exponential moving average (EMA) and 200-day EMA were bearishly crossed for 365 days, and subsequently crossed bullishy in late May. Both the 50-day EMA at US$82 and 200-day EMA at US$75 should now act as support for price. Further, long/short open interest on Bitfinex (top panel, chart below) is currently 83% long with longs slowly increasing over the past few weeks. Shorts have been essentially unchanged over the past month.

Price has also been bound by a bearish Pitchfork (PF) for the past year, with anchor points in December 2017, February 2018, and April 2018. Based on the local bottom, price has a maximum upside of US$120 until the PF is invalidated. The median line (yellow), currently at US$47, will be continually tested as either support or resistance so long as the PF is active.

Monero Price Analysis 14 June 2019 (11)

There are currently no active RSI or volume divergences to suggest waning bullish momentum, however, a bearish reversal pattern has begun to form. A head and shoulders with messy structure and declining volume profile holds a bearish bias. Hallmarks of the pattern include a series of three local highs held above a horizontal support. The pattern holds a 1.618 fib extension and measured move of US$72 and US$63, respectively. These targets also bring price back to the previous zone of consolidation and set the table for a larger macro head and shoulders.

Monero Price Analysis 14 June 2019 (12)

Turning to the Ichimoku Cloud, four metrics are used to determine if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best trade entry always occurs when most of the signals flip from bearish to bullish, or vice versa.

Cloud metrics on the daily time frame with doubled settings (20/60/120/30) for more accurate signals are bullish; price is above the Cloud, the Cloud is bullish, the TK cross is bullish, and the Lagging Span is in price and above Cloud. If price remains sideways, a retracement to the bottom of Cloud support at US$73 becomes more and more likely. Trend will remain bullish so long as price remains above the Cloud.

Monero Price Analysis 14 June 2019 (13)

Lastly, on the XMR/BTC daily chart, the trend is significantly bearish. The 50-day EMA and 200-day EMAs have been bearishly crossed for over a year and Cloud metrics are also 100% bearish (not shown). If buyers do not hold the current psychological support of 0.01 BTC, there is no significant support until the previous local highs near 0.004 BTC. Additionally, there are no active RSI or volume divergences currently to suggest waning bearish momentum.

Monero Price Analysis 14 June 2019 (14)


Fundamentals show active and continued incremental upgrades over the past two years, including decreased transaction costs, improved transaction efficiency, blockchain pruning, and improved custody solutions. Pending a successful audit, the network will drastically change its consensus algorithm from CryptoNight to Random X this coming October, in a bid to remove ASICs from the network permanently.

Metrics also show substantial network use as transactions per day recently hit a new record high and active addresses have increased significantly. Thanks to XMR’s ironclad privacy, darknet traffic continues at a fever pitch with new mining malware and various attack vectors being discovered almost monthly. The large oscillations in network metrics likely represent mining malware going online and coming offline after being patched or turned off.

Technicals for the XMR/USD pair suggest a waning bull trend with the potential formation of a bearish head and shoulders. Targets for the likely incoming pullback include a range from US$63 to US$75. Technicals for the XMR/BTC pair remain firmly bearish, with trend metrics showing no signs of bullish momentum.Critical support stands at the 0.01 psychological level, which if breached, will likely result in significant downward momentum, potentially towards 0.004.


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