The Liquidity Debacle Strikes Again

XMR flash crash

Monero has been crab walking for over a year now in the $130-$170 range, but yesterday it did something that I really thought it wouldn't. It flash crashed 40% from $165 to $100 in a quite epic tumble. The narrative for this panic seems to be the impending Binance delisting, but this made very little sense to me in the heat of the moment.

We've known about these rumors for weeks and even months. Binance has been captured by regulators. CZ has fallen. They basically have to do whatever America wants. Of course they were going to delist XMR. Why? Because it works is why. Regulators absolutely hate it.

The vibe on social media was extremely disappointing.

Especially the Bitcoiners. Everyone chimes in to kick a fren when they're down rather than realize that this is bad for everyone. The whole, "glad it wasn't me," vibe is honestly kind of embarrassing, but obviously not as bad as the Nelson from the Simpsons, "HaHa!"

So I put my money where my mouth was...

I've been waiting for an entry point on XMR for quite some time. Privacy coins are a very longshot play in the current climate because the current climate does not value (or even respect) privacy. They will continue to underperform until they acquire deep liquidity pools that can't be shut down. When that happens: they will moon. But there's really no telling when that will happen because creating liquidity for an asset that can't be tracked or confirmed tends to be wildly difficult.

So I went to buy like 1 or 2 coins for a couple hundred bucks and totally fat-fingered it on accident and ended up getting 8. Rather than roll it back I just let it ride because my goal was to get 10 XMR into cold storage eventually. I couldn't help but feel like I was going to get cut by the falling knife and it would dip down right after buying, as is often the case.

Imagine my surprise today when I was up 20% in 12 hours. Of course in retrospect this move was very easy to justify because the crash just didn't make that much sense. All the big players knew it was probably going to happen and price didn't flinch, and then on confirmation of delisting it tanks 40% instantly? Was definitely one of those rare buying opportunities that are very easy to miss in crypto even though they seem completely obvious in hindsight.

In fact I believe the entire market is in that exact situation right now. ETF inflows keep gobbling up Bitcoin supply with no end in sight. Halving event and FED pivot could stack themselves on top of that over the next year. I'm thinking that this will be looked at as a point in history in which buying and holding was the painfully obvious move, and yet lots of people still seem to be selling or even shorting the market. Strange times.

Monero's problem is our problem

Hive has this exact same liquidity issue. HBD only has volume on the internal market. Hive has been cut off from a lot of users due to regulations. We are over here floundering a bit as we try to get our footing, just like Monero.

Lucky for us I think we are surprisingly in a much better position than Monero even though our community is smaller and far less known. We're basically in a position where all we have to do is extend our liquidity to BTC and we're good. Lightning Network adoption helps us, as we have protocols that allow for instant conversions to the Lightning Network. Wrapped BTC on the VSC chain could be quite the boon for creating a decentralized derivative that can be traded around for zero fee. Assuming that code is solid and there are no hacks, we may be approaching the light at the end of the tunnel.

Introverted vs Extroverted networks.

There are huge advantages to being an extroverted network. You get all the liquidity and all the network effect. Hive and XMR are pretty introverted networks, but there are some advantages with that as well. For starters: it's much harder to exploit an introverted network because it's not like bad-actor EVM devs can hop over here and clean house. Now that I think about it: we had firsthand experience with this in the wLEO hack. The ETH got drained from the liquidity pool but the hacker didn't try to steal any of the assets on HiveEngine. They probably didn't even know it existed.

Conclusion

Celebrating another token's demise is beyond toxic (unless it's Steem amirite). We are all in this together, and the falsely perceived competition pales only in comparison to the blatant tribalism and othering that we humans so love to employ. Losing access to another key liquidity pool for Monero is not a win for anyone but the regulators. If anything, think of XMR as a shield for your favorite token. If privacy coins are doing well then our real enemies won't have time to mess with the smaller projects; they'll have their hands full.

The ability to branch out and operate outside of previously defined boundaries is a key function of interoperability and liquidity. These delisting rampages are a very clear signal that we need to invest our time and effort into creating pools that can't be shut down on a whim. Privacy and commerce are basic human rights. Don't let anyone tell you different.

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