MONERO [XMR] REPORT - Scaling New Heights in Blockchain Performance: 2025 Portfolio / Part Two

Part Two / Page 12

‍

Opportunities

• Growing Demand for Financial Privacy: Macro trends suggest that privacy as a value proposition could strengthen:
  
  
  
  • Invasive Regulations: As governments enforce stricter KYC, travel rule compliance, and consider central bank digital currencies (which could enable granular tracking), a segment of the population will seek refuge in privacy-preserving alternatives. Monero stands to benefit as arguably the most accessible privacy-preserving currency.
    
    
  • Geopolitical Uncertainty: In regions experiencing political turmoil or authoritarian crackdowns, private money can be a lifeline. We’ve seen spikes in LocalMonero usage in countries with unrest (users safeguarding savings). Unfortunately, global instability is rising, potentially increasing organic grassroots adoption of Monero for humanitarian reasons (dissidents, NGOs, etc., quietly using XMR to move funds).
    
    
  • Rising Cybersecurity Awareness: The average person is becoming more aware of data privacy (thanks to Big Tech controversies, etc.). This could extend to financial data. If privacy coins can shed stigma and be seen as analogous to using a privacy browser (like Brave) or VPN for finance, consumer interest could tick up. Monero could market itself as “privacy by design, for your protection” rather than something nefarious – tapping into the broader privacy tech movement.
    
    
• Technological Catalysts: Monero’s future upgrades can be catalysts for adoption and market re-rating:
  
  
  
  • The Seraphis upgrade will significantly boost Monero’s anonymity set and potentially enable “one-of-all” ring signatures. If implemented smoothly (perhaps in 2025/26), it will generate positive buzz and academic acknowledgment that Monero has advanced the state-of-the-art. This could draw in new users who were on the fence, and reassure current users that Monero remains the privacy leader.
    
    
  • Haveno DEX and Atomic Swaps: As Haveno (Monero’s decentralized exchange) matures following its 2024 beta, it could meaningfully improve accessibility. A user-friendly Haveno could bring thousands of new users who previously couldn’t easily buy XMR due to local delistings. Likewise, atomic swap services (XMR <-> BTC) will grow, potentially integrating into wallets. These advancements could reduce Monero’s liquidity handicap over time, unlocking value.
    
    
  • Layer-2 and Integration Opportunities: There are exploratory ideas like payment channels for Monero or sidechains (e.g., the Tari project for digital assets). If any come to fruition, they could expand Monero’s use-cases (e.g., near-instant payments via Lightning-like channels, or tokens on a Monero sidechain). Monero could thus capture some functionalities beyond simple transfers, all while leveraging XMR for fees/settlement.
    
    
• Undervalued Niche with Monopolistic Characteristics: Monero currently holds a de facto monopoly in the full-anonymity cryptocurrency niche. If one believes this niche will not disappear, then Monero’s position is akin to owning the dominant asset in a small but potentially critical market segment. Any positive development (regulatory environment improving, or even just stabilizing) could lead to outsized gains as Monero re-prices to reflect its scarcity and utility. For instance, should a major exchange decide to list Monero (perhaps after clarifying MiCA compliance by geo-fencing, etc.), XMR could see significant appreciation due to pent-up demand. Similarly, if institutional attitudes soften (e.g., a forward-looking fund makes a strategic allocation to XMR as a privacy hedge, lending legitimacy), it could trigger reevaluation.
  
  
• Use in Emerging Sectors (DeFi and NFTs Privacy): There’s an opportunity for Monero to integrate with or complement DeFi and NFTs via interoperability:
  
  
  
  • Projects are exploring Monero-to-Ethereum bridges or XMR-wrapped tokens for use in DeFi. If a trustworthy decentralized bridge emerges, XMR liquidity could flow into lending or swap pools on Ethereum, giving holders yield and increasing demand for XMR as collateral.
    
    
  • Privacy-focused NFTs or data markets could potentially use Monero as the settlement layer for confidential transactions. While speculative, Monero’s brand in privacy could extend to being the preferred currency in any future privacy-centric digital economies. These cross-sector integrations are in early stages, but present upside optionality.
    
    
• Thesis as a Hedge Asset: Monero might increasingly be viewed not just as a transactional currency but as a hedge in a portfolio context: a hedge against aggressive financial surveillance and against the scenario of cashlessness. If investors (especially family offices) adopt this mindset, Monero could see strategic allocations similarly to how gold or Bitcoin are used, albeit at a smaller scale. For example, some might hold Monero as an “insurance policy” that if banking secrecy is lost, they have a way to discreetly store and move wealth. Given Monero’s current ~$5B size, even modest flows from hedge-minded investors can impact price significantly.
  
  

Threats

• Regulatory Escalation and Enforcement: The biggest threat is a drastic regulatory escalation, such as:
  
  
  
  • Criminalization of Use: If major jurisdictions made using or facilitating Monero transactions illegal (with serious penalties), it could drive the asset underground and decimate its value. This is not base-case (as it raises questions about enforcing bans on open-source software), but the climate is unpredictable. OFAC has already sanctioned Monero addresses associated with crime. While sanctioning individual wallets is symbolic (Monero can easily generate new addresses), it signals that Monero could become a direct target of policy.
    
    
  • Exchange Delistings Continuation: If remaining top exchanges (like Binance global) fully delist Monero for all users, liquidity and perceived legitimacy would suffer further. Each delisting event tends to cause short-term price drops and long-term lower volume.
    
    
  • KYC on Self-Hosted Wallets: Proposals have floated (in EU, US) to heavily regulate self-custody. If users globally are forced to only transact from KYC-registered addresses, Monero’s very use becomes difficult (since one cannot effectively KYC an anonymous address). Enforcement would be tough, but even partial implementation could scare casual users away. In essence, regulatory threat looms large: Monero’s upside is capped by it, and downside exacerbated by it.
    
    
• Competition – Technical Leapfrogging: While no current project out-privatizes Monero, cryptography is advancing:
  
  
  
  • A new cryptocurrency could emerge with a fundamentally superior privacy technology (for instance, some combination of zk-proofs and network-layer anonymity that surpasses Monero’s model). If it gained traction and addressed some of Monero’s pain points (e.g., faster transactions, easier integration, compliance toggles), it might siphon Monero’s user base. This risk is mitigated by Monero’s ability to adapt (it could incorporate new tech itself, as it did with Bulletproofs), and by network effects (the incumbent advantage).
    
    
  • There’s also a scenario where a major platform like Ethereum implements highly usable privacy (maybe via a widely adopted Layer-2). If billions of dollars in liquidity on Ethereum could privately transact, some of Monero’s use (especially arbitrage and cross-exchange settlement use) might diminish. However, any such solution likely still wouldn’t offer default privacy for a standalone currency, which is Monero’s niche. Nonetheless, technological disruption is a threat – Monero must continue innovating to retain its edge. The team’s strong R&D focus partly mitigates this.
    
    
• Network Attacks: As a proof-of-work network, Monero could, in theory, face 51% attacks or other exploits:
  
  
  
  • Monero’s ASIC-resistant RandomX means an attacker would need vast CPU resources to overpower the network, which is currently impractical. But if, say, a botnet targetted Monero, or a state actor devoted supercomputer power, a double-spend attack or network disruption is conceivable. This threat is lower for Monero than smaller coins (Monero’s hash rate and community response capacity is substantial), but not zero.
    
    
  • A more subtle attack is spam or ledger bloat: filling blocks with dummy transactions to increase node cost and maybe attempt to clog the system. Monero’s dynamic block and fee mechanisms provide some defense, but a sustained attack could raise costs and harm user experience until mitigated.
    
    
  • Quantum computing (long-term threat to all crypto): Monero’s cryptography (elliptic curve, etc.) would need upgrades in a post-quantum era, similar to Bitcoin. The team would likely pivot to quantum-resistant algorithms if needed, but any delay or issues could be exploited. While these technical threats are remote at present, they could severely damage trust if realized.
    
    
• Reputational/Black Swan Events: Any event that undermines Monero’s core promise or trust can be catastrophic:
  
  
  
  • Inflation Bug or Undisclosed Exploit: If an attacker found a way to create XMR out of thin air (and it went unnoticed for long), it could inflate supply and ruin credibility. Notably, a past Monero bug of this nature was responsibly disclosed and patched in 2018 before exploitation (Monero - Wikipedia). The team is vigilant, but the possibility remains.
    
    
  • Core Team / Dev Schism: Monero’s decentralization in governance is strength, but a very public conflict or fork could shake community confidence. For example, if a notable group of contributors advocated a controversial change (like altering emission or adding backdoors for regulators) and the community split, it could create two incompatible Monero forks, confusing markets and users. Thus far, Monero has avoided any chain splits (no major forks other than protocol upgrades), but crypto history (e.g., Bitcoin vs Bitcoin Cash) shows it can happen anywhere given philosophical differences.
    
    
  • Association with High-Profile Crime or Terrorism: If Monero were specifically cited in a major terrorist financing case or high-profile criminal enterprise, it could become a political target. e.g., a headline “Terror group X funded via Monero” could spur emergency laws. While Monero is simply a tool (like cash), politically it could be scapegoated, representing an existential reputational threat.
    
    
• Macro Crypto Market Risk: Monero is not immune to broader crypto market cycles. In a severe prolonged crypto bear market, Monero could fall along with others due to general capital outflows, even if its fundamental usage remains. It tends to recover well, but timing risk is relevant – an investor might have to endure multi-year winters. Additionally, competition for investor mindshare from trending sectors (metaverse, Web3, etc.) can divert speculative interest away from Monero, leading to underperformance during hype-driven phases.
  
  

Overall Assessment & Investment Grade

Overall Assessment: Monero offers a unique and valuable use-case (true financial privacy) that no other major asset can match. It has demonstrated technical robustness, a committed community, and enough real-world adoption to indicate staying power. These strengths position XMR as a potentially rewarding investment for those who anticipate increased importance of privacy in the digital asset realm. However, Monero’s path to significant appreciation is constrained by regulatory crackdowns and limited market access – factors that introduce substantial risk and uncertainty.

From an investment standpoint, we classify Monero as a high-risk, high-reward speculative asset. Its risk profile is elevated due to extreme regulatory sensitivity and volatility, yet its reward profile could be equally extreme if global circumstances tilt in favor of privacy or if Monero overcomes current liquidity barriers.

For sophisticated investors with long-term horizons and a strong belief in privacy as a growing value driver, an allocation to Monero could act as a portfolio diversifier and tail-risk hedge (against draconian financial oversight). It is a play on an underinvested theme in crypto, with potential for outsized returns if that theme gains traction.

Conversely, conservative investors or those operating under strict compliance mandates may find Monero’s risk outweighs its benefits at present – especially given the possibility of further marginalization in regulated markets.

Investment Grade: We assign Monero an “Speculative Buy” – equivalent to a high-risk grade of B (on a scale where A = Excellent, B = Good, C = Fair, D = Poor). In a more traditional rating taxonomy, this correlates to an “Opportunistic” or “Venture” grade investment. It is not investment-grade in the traditional sense (which would imply low risk), but it is a fundamentally solid project within its niche, worthy of consideration for risk-tolerant capital. We expect Monero to outperform the broader crypto market on a risk-adjusted basis if privacy narratives strengthen, but underperform or remain highly volatile otherwise.

Our rating reflects that Monero’s strengths – privacy tech leadership, strong community, proven use case – slightly outweigh the known weaknesses – regulatory headwinds, liquidity constraints – for an investor who actively desires exposure to the privacy theme. We also assume the investor can navigate practical challenges (secure self-custody, using decentralized exchanges, etc.). The rating is contingent on a long-term view; short-term traders should size positions very cautiously.

Closing Remarks: Monero stands as a testament to the original cryptocurrency ethos of self-sovereignty, privacy, and decentralization. It has carved out a critical role as the protector of financial privacy in the digital realm, a role that could become increasingly vital as the world grapples with balancing personal freedom and security. For top-tier VCs and family offices, Monero represents an opportunity to invest in the “privacy premium” – the idea that in the future, assets enabling privacy will be in high demand as privacy becomes scarcer elsewhere.

Investing in Monero is not without hurdles or controversy, but therein lies its opportunity. In a future scenario where most digital transactions are monitored, Monero could command a significant scarcity value as one of the last bastions of true financial anonymity. Our due diligence finds that Monero has the technical foundation and community resilience to potentially reach that future and capitalize on it.

We recommend interested investors approach Monero as a strategic, long-term holding – accumulate gradually (preferably during market dips or via mining if feasible), utilize best practices for security and compliance, and be prepared to hold through high volatility. As part of a balanced crypto portfolio, Monero can provide diversification (low correlation to DeFi and meme sectors) and a hedge against the narrowing of financial freedoms.

In conclusion, Monero (XMR) offers a compelling but specialized investment case. Its fate will closely track society’s evolving stance on privacy. For those who foresee a growing need for untraceable digital cash, Monero is not just a cryptocurrency, but a thesis in conviction – one that could yield significant returns if that conviction proves prescient.

Sources Cited (Inline):

1. CCN – “Monero Users’ XMR to Be Converted to BTC as Privacy Coins Shunned in Europe” (Apr 2024)
   
   
2. Blockworks – “Privacy coins sacrificed so crypto could run” (June 2024)
   
   
3. CoinDesk – “It’s Back to Bitcoin for Darknet Markets After Monero’s Binance Delisting” (Mar 2025)
   
   
4. GetMonero (Official) – “Roadmap – Coming Improvements (Seraphis, etc.)”
   
   
5. Chainalysis – “Monero: All About the Top Privacy Coin” (May 2023)
   
   
6. GetMonero Moneropedia – “Bulletproofs” (Monero’s 80% tx size reduction)
   
   
7. Chainalysis – “Monero in action & market growth” (2023)
   
   
8. Yahoo Finance via CCN – “Monero Price Prediction 2025: XMR showing strength” (Apr 2025)
   
   
9. Wikipedia – “Monero – Privacy Features”
   
   
10. GetMonero – “Merchants & Exchanges (Merchant Adoption)”
    
    
11. Chainalysis – “Monero market capitalization vs Zcash/Dash”
    
    
12. GetMonero – “What is Monero? (No premine, launched 2014)”
    
    
13. Kriptomat – “Monero Supply (Tail emission 0.6 XMR/block)” (What Is Monero & How Does It Work? Who Created XMR?)
    
    
14. Monero Observer – “Exodus to end XMR support (Apr 2025)”
    
    
15. CCN – “Monero Price Prediction – targets $263 short-term” (Apr 2025)
    
    
16. CoinDesk – “Darknet markets returning to Bitcoin after XMR delistings”
    
    
17. CoinDesk – “Daily Monero tx count halved YoY after delistings” (Mar 2025)
    
    
18. Reddit (Monero) – User discussion on tail emission inflation ~0.8%
    
    
19. Troy Media – “Solana vs Monero – tokenomics comparison” (Jan 2025) (Solana vs Monero (XMR): Speed, Privacy, and Utility in 2025)
    
    
20. Messari – Monero Profile (Metrics as of May 1, 2025)
    
    
21. CoinMarketCap – Monero live data (May 2025)
    
    
22. Electric Capital – Developer Report (Monero 3rd-largest dev community)
    
    
23. Financial Times – “Inside Monero, crypto of choice for cybercriminals” (June 2021) (Monero - Wikipedia)
    
    
24. CNBC – “Hackers mine crypto for North Korea (Monero use)” (Jan 2018)
    
    
25. Binance Research – “Notice of asset delisting…Monero in Ireland/Belgium”
    
    
26. Reuters via PYMNTS – “EU may ban privacy coins under leaked plans” (Nov 2022)
    
    
27. Chainalysis – Crypto Crime Report 2025: illicit volume and 0.14% stat
    
    
28. Forbes – “Monero surges to $317 after massive hack” (Apr 2025) (title reference)
    
    
29. Monero StackExchange – “Bulletproofs reduce tx size ~80%”
    
    
30. Monero Research Lab – “OSPEAD: Fortifying Monero vs statistical attack” (Dec 2022)

‍

Additional References (Further Reading):

• “Mastering Monero” by SerHack (2019) – Community-produced book explaining Monero’s technology and use (for a comprehensive tech background).
  
  
• Chainalysis Webinar (March 2025) – Privacy Coins and the Law: discussed trends in darknet market currency shifts.
  
  
• Europol IOCTA 2021 Report – noted Monero uptake in cybercrime and the challenges posed to investigators.
  
  
• MoneroKon 2022 Presentations – (available on YouTube) covering topics like Monero mining decentralization, adoption in emerging markets, and upcoming features (valuable for gauging community direction).
  
  
• GetMonero.org – “Monero Best Practices” and “Myths” pages – addressing common questions about traceability and legality, providing insight into how the community manages user expectations.
  
  
• Coin Center (non-profit) – “Privacy Coin Policy” brief (2020) – argues the case for financial privacy rights, offering a counterpoint to the regulatory threat narrative (useful for understanding the debate).
  
  
• Academic Paper: “Empirical Analysis of Traceability in Monero” by Moser et al. (2018) – a seminal study often cited, which found traceability issues in early Monero (subsequently fixed), giving context to Monero’s iterative improvement in privacy (Monero - Wikipedia).
  
  
• Messari Research – “Crypto Theses for 2025” (if available) – which might mention Monero’s outlook as part of broader sector analysis.
  
  
• Monero Observer (news site) – archive of 2024–2025 events affecting Monero (e.g., exchange news, development updates) for ongoing monitoring.

‍

Thank you for taking the time to read this article. We invite you to explore more content on our blog for additional insights and information.

https://www.thestandard.io/blog  

‍

"If you have any comments, questions, or suggestions, please do not hesitate to reach out to us at [ https://discord.gg/K72hed6FRE ]. We appreciate your feedback and look forward to hearing from you."

‍

^Note: This analysis is based on publicly available information as of April 2025. Investors should conduct their own due diligence before making investment decisions.