The more it's banned, the higher the prices rise? Unveiling the truth behind the XMR price surge.

Author: Frank, PANews

XMR (Monero), one of the leading players in the privacy coin market, hit a new all-time high on January 13, with its spot price exceeding $690, once again sparking discussions about privacy coins in the market.

From January 2025 to the present, XMR has surged from around $200, with a maximum increase of 262%. This surge is extremely rare given the current weakness of mainstream altcoins. Even more intriguing is that this rally has occurred against the backdrop of unprecedented global regulatory tightening.

Due to compliance pressures, major centralized exchanges like Binance have already delisted XMR for spot trading. On January 12th, the Dubai Virtual Asset Regulatory Authority (VARA) officially announced a ban on the trading and custody of privacy tokens throughout Dubai and its Free Zone. However, this ban failed to cast a shadow over XMR; instead, it defied the trend and reached new highs, providing a ironic moment for the Dubai government.

Amidst the liquidity crunch in exchanges and the onslaught of regulatory scrutiny, who is truly driving the rise in XMR prices? PANews strips away the surface to uncover the real demands behind this market surge.

Exchanges are not the core pricing venues

Despite the hot market, this is not driven by funds within the exchange.

In the spot market, while XMR's recent trading volume has increased along with the price rise, it has remained largely within the range of tens of millions to 200 million US dollars, without any particularly dramatic increase. Looking back, the truly significant peak in spot trading volume was reached on November 10th at 410 million US dollars. This means that spot trading (or rather, spot buying on centralized exchanges) was not the biggest driver of this recent doubling of prices.

The situation is similar with contracts. The peak in trading volume also occurred on November 10th. Subsequently, until about a week ago, contract trading volume did not show a significant increase, and even showed some signs of decline. Observing the open interest data, its USD-denominated change curve almost completely overlaps with the price movement. There has been no abnormal surge in the number of XMR positions in the market; the increase in open interest is solely due to the price increase, rather than a large influx of new funds opening positions.

Clearly, mainstream exchanges are not the core venue for current XMR pricing.

Supply-side undercurrents: miners reshuffling and early planning

Since the "overt" funding is unremarkable, we need to turn to the "dark" world of blockchain. As the most private network, XMR has very little information to mine, but changes in mining difficulty and mining rewards can give us a glimpse into the capital deployment on the supply side.

Historical mining difficulty typically reflects the enthusiasm of capital participation in the cryptocurrency ecosystem. Data shows that XMR's mining difficulty began to climb rapidly at the end of 2024, and remained in a state of rapid growth throughout the first half of 2025. Although there were some fluctuations between September and November, a new round of difficulty increases has recently begun.

An interesting episode deserves mention: In September, the Qubic project claimed to control over 51% of the XMR network's hashrate and conducted a "demonstration attack," causing a chain reorganization of the XMR network lasting 18 blocks. This incident served as a wake-up call for the community, leading many miners to migrate their hashrate to the established mining pool SupportXMR. This incident was a major reason for the dramatic fluctuations in mining difficulty at the end of 2025, but it also indirectly demonstrates the activity and resilience of the hashrate market.

What deserves more attention is the correlation between the mining revenue curve and the difficulty.

Prior to April 2025, mining revenue on the Monero network experienced a significant drop. This coincided with a sharp increase in hashrate, while the cryptocurrency price remained volatile. This divergence diluted revenue, potentially forcing some smaller, higher-cost miners out of the market. Data shows that mining difficulty briefly dipped in April, supporting this hypothesis.

This was a classic case of "miner surrender" and "coin exchange." Following this, as prices surged, mining profits and difficulty once again rose in tandem. Judging from the data changes during this period, as early as the beginning of 2025, some large mining companies or capital firms with strong risk resistance may have already begun to strategically invest in Monero token mining despite low returns.

Demand-side validation leads to high premiums for privacy payments.

If miners represent confidence on the supply side, then average transaction fees most accurately reflect demand on the user side.

As the chart shows, Monero's average transaction fees remained relatively stable until the first half of 2025, generally staying below $0.1. However, a growth trend began to emerge in June; by December 11, the highest average fee reached over $0.3, more than three times higher than six months prior.

Because Monero has a dynamic block scaling mechanism, the surge in fees indicates that a large number of users are trying to send transactions quickly and are willing to pay high fees to compensate miners for the scaling costs. This indirectly proves that the demand for real transactions on the Monero chain began to increase significantly starting in the second half of 2025.

However, we also discovered an interesting pattern: the surge in on-chain fees often coincides with a price spike.

For example, on April 28th, XMR suddenly surged by 14%, causing the average transaction fee to spike to $0.125 that day; however, during the subsequent slow price recovery, the fee plummeted back to its lowest point (reaching $0.058 on May 4th). This illustrates that while price fluctuations can temporarily drive on-chain demand, demand also tends to subside once the volatility subsides. Although the two may not always occur at the same pace (e.g., on May 14th, fees increased but the price remained unchanged), overall, over the past six months, price increases have temporarily boosted on-chain demand, and the actual increase in on-chain demand, in turn, has fueled market optimism towards XMR; the two are mutually reinforcing.

The truth on both sides of the story

Based on the above data, the surge in XMR prices may have a complex, multifaceted truth.

The so-called "white" refers to the "anti-fragile" rebound of privacy demands under high regulatory pressure.

The reverse effect of regulation is becoming increasingly apparent. Dubai's VARA ban, far from crippling XMR, has instead made market participants realize that regulators can ban exchanges, but not the protocol itself. With major exchanges withdrawing from XMR trading, the logic of pricing based on market makers and derivative contracts has been rewritten, and XMR has returned to a model controlled by real users or certain heavyweight players. After breaking away from the exchange system, privacy coins have developed an independent pace completely different from the mainstream market.

The so-called "black" refers to the capital game under information asymmetry.

Behind this lack of transparency, there may be hidden "market manipulators" operating beneath the surface. The lackluster trading data (even on January 13th, when the market hit a new high, the contract open interest was only $240 million, and the liquidation volume was only a little over $1 million) indicates that mainstream institutions were almost unable to predict and participate in this round of price increases in advance, and could only follow along.

This information asymmetry, controlled by a select few, leads to extreme price volatility. Especially when the market begins to focus on such price increases, it often foreshadows a short-term overheating of sentiment. Consider the privacy coin ZEC in November, which experienced a pullback of over 50% after its surge. Ultimately, the privacy coin market suffers from significant information asymmetry, placing ordinary retail investors at a distinct disadvantage.

Amidst the dramatic fluctuations in privacy coins, on-chain data may be our only reliable guide. However, in the depths of opacity, the high premium for freedom is always accompanied by unknown risks.