Privacy coins were dead in the water, an afterthought for most of last year as the crypto market hit all-time highs and they languished.
Now, the top two privacy coins, Monero’s XMR, and Zcash’s ZEC, are both up more than 25% on Tuesday before settling at 21% and 16% respectively in early morning trading U.K. time. What’s going on?
It’s a surprising pocket of resurgence in a generally bleak crypto market that has dropped 11.1%, in the last week. It’s hard to know precisely why these coins are moving. A well-known trader, who goes by Cuban, told The Defiant there are two potential catalysts for XMR and ZEC’s explosive price action.
First is a new bill that Sen. Elizabeth Warren (D-Mass.) introduced this week. According to her Twitter, the bill will “ensure crypto isn’t used by Putin and his cronies to undermine economic sanctions.”
Warren also wrote a letter to U.S. Treasury Secretary Janet Yellen on March 2 that inquires about the cryptocurrency industry’s ability to comply with sanctions, especially those recently imposed on Russia.
With the details of her bill not yet public, investors may be trying to get out in front of increased scrutiny and regulation by purchasing privacy coins, which, as their name suggests, enable users to keep their transactions’ origins and destinations confidential.
The second factor driving XMR and ZEC is news that the Russian central bank is restricting the sale of foreign currencies, Cuban said. The move leaves Russians potentially trapped holding roubles, which has collapsed to historic lows against the U.S. dollar since sanctions were imposed. Russians may be buying privacy coins to preserve purchasing power and maintain the ability to transact freely, which coins like XMR and ZEC enable, at least theoretically.
And of course, crypto is full of traders trying to profit rather than actually use privacy tokens. One such trader, who goes by Depression BTC, appears to have entered a leveraged long position on Mar. 7, according to his Twitter, the day before the massive jump.
“Holy sh*t ZEC XMR sending,” the trader tweeted on Mar. 8 as the assets took off.