The privacy coin Monero ( XMR) is currently locked in a punishing downtrend, a stark reversal from the euphoric heights of Jan. 14, when it notched a new all-time high of $797. In a swift 24-hour liquidity drain, XMR plummeted 9.5% to $463, effectively incinerating the massive gains realized during its mid-month rally. This latest leg down brings the digital asset’s seven-day losses to nearly 20%, resetting its price action to pre-Jan. 10 levels.

While the broader crypto market is feeling the chill, Monero’s descent has been disproportionately steep compared to its peers. For perspective, Zcash (ZEC), which has had a rocky start to 2026, dipped a modest 3.1% on Jan. 25 and 8.6% over the week. At a price of $357, ZEC maintains a market cap of $5.9 billion—trailing Monero’s valuation by nearly $2 billion, even after XMR’s recent haircut.

The catalyst for Monero’s rapid ascent—and its subsequent crash—appears tied to illicit flows. Market sentiment soured after prominent on-chain sleuth ZachXBT linked XMR’s initial surge to cybercriminals aggressively swapping $285 million in stolen digital assets for the privacy coin. This “laundering-induced” demand created an inorganic price spike that analysts warned was unsustainable. Once the laundering cycle peaked, the buying pressure evaporated, leaving retail holders to catch the falling knife.

Read more: Monero Stalls Post-ATH: How a $282M Social Engineering Scam Fueled XMR’s Rally

The technical breakdown was further catalyzed by a fundamental blow on Jan. 23. The Indian Financial Intelligence Unit (FIU) reportedly issued a directive instructing exchanges to restrict transactions involving privacy-focused assets, specifically targeting XMR, ZEC and DASH. Citing heightened risks of money laundering and terrorism financing, Indian authorities have effectively tightened the noose on privacy coin liquidity.

This move marks a growing geopolitical trend; India now follows the United Arab Emirates, which implemented similar restrictions on Jan. 12. As major economies move to de-list or restrict “dark” assets, Monero faces a dual-threat environment: waning speculative interest and an increasingly hostile regulatory landscape.

• Why is Monero ( XMR) dropping? XMR plunged after illicit flows and regulatory crackdowns drained liquidity.
• How steep is the decline? Monero fell nearly 20% in seven days, erasing mid‑January gains.
• What role did regulators play? India’s FIU restricted privacy coin transactions, echoing UAE’s earlier ban.
• How does this compare to peers? Zcash dipped just 3.1%, showing Monero’s losses are disproportionately severe.

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