Monero (XMR) has been quietly producing a very impressive performance, and is currently posting a 76% increase against the US dollar

Monero (XMR) has been quietly generating some very impressive gains, and is currently posting a 76% increase against the US dollar since the start of the year. This makes XMR the crypto top 100's fourth-best performer in this time period.

Monero's surge past $300

Monero made the bulk of its year-to-date gains since the start of April. The price of XMR started steadily increasing in the second week of April after hitting a local bottom at $197. The price crept up to $230 on April 27 and then suddenly shot upwards, eventually breaking the $300 barrier on May 9.

At the time of writing, XMR is changing hands at $341.8 after a 17% increase in the last 7 days.

To be clear, Monero is far from the only cryptocurrency that has been performing well as of late. In the last month, 87 coins in the crypto top 100 have increased in value, with 54 of them gaining 20% or more.

However, Monero's rally is particularly interesting since it preceded the recent price spikes displayed by Bitcoin and Ethereum, which have helped spark rallies for a wide range of altcoins.

Notably, the Monero price increase has also led to a sharp uptick in Monero hashrate since it has had a positive impact on the profitability of Monero mining. According to data from CoinWarz, the Monero network's hashrate is up 16.5% since April 14, rising from 4.06 GH/s to 4.73 GH/s.

The Monero hashrate is currently posting new all-time highs. Image Source: CoinWarz

What's behind the Monero rally?

The recent surge in Monero's price has left many crypto observers searching for explanations—especially since the rally began before those of Bitcoin and Ethereum. One significant catalyst appears to be a large-scale Bitcoin theft.

On-chain researcher ZachXBT has suggested that Monero's price surge was triggered by someone swapping a massive amount of stolen Bitcoin for XMR. According to ZachXBT, approximately 3,520 BTC (worth $330.7 million at the time) was drained from a single address and converted to Monero. This dramatic transfer coincided with a notable spike in volatility and a surge in buy orders for the XMR-BTC order book.

Nine hours ago a suspicious transfer was made from a potential victim for 3520 BTC ($330.7M) Theft address bc1qcrypchnrdx87jnal5e5m849fw460t4gk7vz55g Shortly after the funds began to be laundered via 6+ instant exchanges and was swapped for XMR causing the XMR price to spike and traders to experience extreme levels of slippage.

— ZachXBT (++) (@ZachXBT) May 10, 2024

Interestingly, this huge transaction did not correspond to increases in metrics like active wallets or network activity, making it challenging at first to pinpoint the cause of Monero's spike. Adding to the intrigue, liquidity for XMR has been thin in recent months, largely due to major exchanges delisting the privacy coin in response to regulatory pressures.

As a result, the limited liquidity meant that a large buy had an outsized impact on XMR's price, causing it to surge by as much as 45%.

Blockchain data also indicates that the suspected hacker's transaction likely encountered substantial slippage, potentially losing up to $66 million as a result of Monero's low order book depth. Despite the losses, the decision to use Monero over more liquid assets like Tether or Ethereum speaks to XMR's unique privacy features, which make tracing transactions nearly impossible.

The combination of a high-profile Bitcoin hack, Monero's thin liquidity on exchanges, and a surge in derivatives trading created the perfect conditions for a dramatic XMR price spike—one that outpaced even the gains seen by larger cryptocurrencies.

The FCMP++ upgrade: A major step forward for Monero

Another potential catalyst for XMR could be Monero's upcoming FCMP++ upgrade, which is set to deliver significant improvements to both privacy and usability.

What Is FCMP++ & Why Is It So Important? FCMP++ Full Chain Membership Proofs with Spend Authorization and Linkability is a proposed upgrade to Monero, a privacy focused cryptocurrency, aimed at enhancing sender privacy, wallet efficiency, and long term security. It replaces… pic.twitter.com/M12LkHbzE8

FCMP++ (Full Chain Membership Proofs with Spend Authorization and Linkability) will replace Monero