Monero entered a period of strong volatility after its decline from a new all-time high. The price of XMR dropped sharply, causing mixed reactions in the market.
The asset stabilized above the $500 level; however, downside risks continued to rise. Technical data and derivative indicators suggest caution despite short-term price resistance.
Traders in Monero are withdrawing.
Derivatives data shows a decline in trader conviction. Open positions in Monero have dropped nearly 20% over the last 72 hours, falling from $272 million to $217 million. This decline indicates that traders are closing their positions rather than adding exposure, reflecting increasing uncertainty about the short-term price direction.
Interestingly, the funding rate has remained positive despite the exit of long traders. A positive funding rate indicates that long positions still outweigh shorts. This imbalance shows that traders still expect a recovery, but the decrease in open positions indicates they are not ready to take risks during this period of high volatility.
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The liquidation map highlights significant downside risks beneath current levels. Long positions maintain greater exposure than short positions, increasing the degree of risk if the price declines. Even a slight drop below support at $500 could lead to forced liquidations, intensifying selling pressure.
Data shows that a drop of 3% below $489 could liquidate approximately $3.62 million in long positions. This move is likely to accelerate losses with successive liquidations. This scenario indicates that XMR is still vulnerable to strong downward movements despite its current stability.
The flow indicators on the chain confirmed this cautious trend. The Chaikin Money Flow indicator recorded a sharp decline over the past few days. CMF measures the inflow and outflow of capital using price and volume, providing insights into investor behavior.
The drop of the indicator below the zero line indicates that outflows now dominate Monero. This shift shows that investors are reducing their exposure rather than accumulating. A continued negative reading of CMF usually precedes ongoing price weakness, especially when coupled with weak positioning in derivatives.
Monero is trading near $524 at the time of writing this report, holding above the significant psychological support at $500. This level has served as a key defense area and attracted buyers during recent corrections. Maintaining it is considered crucial to avoid deeper losses.
The Fibonacci retracement level stabilized at 23.6% near $503, often referred to as the support base in a bear market. Holding above this area has kept losses limited so far. However, increased liquidation risks and weak inflows suggest that a break may be possible. A critical drop below $500 could push XMR towards $450.
A bullish reversal cannot be ruled out. If positive funding and trader optimism overcome selling pressure, XMR could regain momentum. In this scenario, the price of Monero may advance towards resistance at $560. A sustained breakout could extend gains up to $606, invalidating the bearish outlook.
