Monero just announced the launch of its tail emission upgrade which is one of its latest and greatest milestones. Here’s what you need to know about the upgrade, its impact on Monero and whether it will impact XMR’s price action.
The tail emission upgrade can best be described as a perpetual incentive designed to incentivize mining. The upgrade will provide a 0.6 XMR reward for every block created in the network. However, the most notable thing about the reward is that it will be issued forever.
Its effect?
The brief summary is that the incentive will help maintain Monero’s hashrate within healthy levels. Most of the top Proof of Work (PoW) blockchain networks have a halving model that will eventually reduce the reward to zero. When that happens, the hashrate may drop significantly since transaction fees alone will not be enough for miner profits. A perpetual reward will help overcome this challenge and help maintain healthy network usage.
As for its potential price impact, such major developments often encourage some upside. However, the announcement does not seem to have had any short-term impact on XMR’s price action. The long-term impact will likely become more apparent as the price grows, resulting in a bigger block reward.
XMR traded at $187 at press time after a 5.32% drop in the last seven days. Its current price level shows signs of weak downward pressure after consolidating back to the neutral RSI level.
XMR’s Money Flow indicator highlighted slight accumulation within the last 24 hours, preventing further downside. However, the price also seems to be struggling to gain bullish volumes, hence the lack of significant upside.
XMR’s on-chain metrics highlight a similar situation. Its volume dropped significantly in the first week of June. However, it hasn’t noted a major difference so far this week. On the other hand, its market cap has been gradually tanking since the start of June as some traders exited after profiting from the latest rally.
Source: Santiment
The profit-taking was particularly highlighted by the drop in the supply held by whales in the last four days. The price drop was notably minor, suggesting that most XMR holders preferred to hodl since the token was already in the lower price range.
Summary
An additional drop in whale supply would likely push XMR out of its current range in favor of a bearish performance. On the other hand, accumulation by whales would signal more confidence and trigger more upside.
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