Bitcoin was once considered the dominant currency in illicit transactions. However, it is now being replaced by privacy-focused cryptocurrencies like Monero (XMR), Zcash (ZEC), Dash, and stablecoins.

The primary reason for Bitcoin’s decline in illegal activities is its transparency.

Reasons for the Shift from Bitcoin to Privacy Coins

Bitcoin (BTC) once dominated illicit activities on the Dark Web, such as Nucleus Marketplace or Brian’s Club. The report from TRM Labs indicated that Bitcoin accounted for 97% of the total cryptocurrency volume associated with illegal activities in 2016.

However, by 2022, this figure had dropped sharply to just 19%, indicating a significant shift toward other cryptocurrencies. 

According to the TRM Labs’ report, illegal cryptocurrency activities involving Bitcoin will drop to just 12% by 2024. Tron (TRX) holds the top position with 58%. In another report from Chainalysis, stablecoins now account for the majority of total illicit transaction volume at 63%. The use of Bitcoin in illegal activities also recorded a significant decline.

White House Market, one of the largest Dark Web marketplaces, stopped accepting Bitcoin and exclusively used Monero (XMR) for transactions in 2020. 

“The Bitcoin workaround was supposed to be there just to help with transition to XMR and as we are concerned, it’s done, therefore we are now Monero only, just as planned,” stated White House Market.

Elliptic researchers uncovered $11 billion in illicit trades using USDT on Cambodia’s Huione Guarantee marketplace in July 2024. Japanese law enforcement tracked Monero, marking the country’s first arrest linked to Monero transaction analysis.

The decision was driven by Bitcoin’s limitations, particularly its blockchain transparency. This move reflected a strategic shift in Dark Web markets and highlighted the rise of privacy coins like Monero, which are designed to provide enhanced anonymity.

The Popularity of Privacy Coins on the Dark Web

The decline of Bitcoin in illegal activities is not coincidental but rather stems from its inherent limitations. First and foremost, Bitcoin’s blockchain is a public ledger. When combined with additional data such as IP addresses or exchange records, every transaction can be tracked.

This transparency has enabled law enforcement agencies like the FBI to use blockchain analytics tools from Chainalysis and Elliptic to dismantle major Dark Web markets. Examples include the Silk Road shutdown in 2013, AlphaBay in 2017, Hydra in 2022, and Incognito Market in 2024.

Additionally, Bitcoin faces technical challenges, including high transaction fees and slow confirmation times. In contrast, privacy coins like Monero, Zcash, and Dash leverage advanced technologies to ensure high levels of anonymity, making transaction tracking extremely difficult. The Research from ScienceDirect suggests that privacy coins are closely linked to Dark Web traffic, further increasing their popularity in illicit markets.

The Two Sides of the Shift to Privacy Coins

On the positive side, Bitcoin’s declining role in illegal activities may improve its reputation as a legitimate financial tool. This could lead to wider acceptance and attract more users and investors.

However, the shift from Bitcoin to privacy coins and stablecoins has made it more challenging for law enforcement agencies to track and prevent illegal transactions. Despite advanced blockchain analytics tools that can detect transaction trails through mixers and tumblers, dealing with Monero and other privacy coins remains a significant challenge.

Global regulators are increasingly scrutinizing privacy coins and stablecoins. Some countries have outright banned privacy coins, while stablecoins are subjected to stricter oversight.

The transition from Bitcoin to privacy coins and stablecoins on the Dark Web is a clear trend, driven by the growing demand for anonymity and efficiency in illicit transactions. While Bitcoin still plays a role in certain crypto-related crimes, its transparency makes it less attractive to the Dark Web.

Meanwhile, Monero, Zcash, Dash, and stablecoins have become the preferred choices due to their enhanced security and privacy. This trend poses significant challenges for law enforcement agencies while driving advancements in blockchain analytics tools. 

However, it also raises concerns about using cryptocurrencies in illegal activities, necessitating a balance between technological innovation and regulatory oversight to ensure transparency and security in the digital financial ecosystem.

Many analysts predicted an increase in Bitcoin in this cycle to levels higher than $200,000. However, the fall of cryptocurrency at the end of February — March 2025 forced market participants to revise their forecasts

BeInCrypto Russia team interviewed Gracy Chen, the CEO of Bitget. She revealed that Bitcoin (BTC) still has the strength to surge beyond the $200,000 milestone.

US Government Might Start Buying Bitcoin Soon – Bitget CEO

Chen drew attention to the fact that many were puzzled by the fall of Bitcoin against the background of the pro-crypt rhetoric of the current US President, Donald Trump. She noted that in America, they began to realize the idea of forming a strategic Bitcoin reserve.

“So far, the government is not purchasing BTC, but this may change soon. Such a step will give cryptocurrency institutional legitimacy and give long-term price support,” Chen told BeInCrypto.

Meanwhile, Chen drew attention to a bill progressing in Congress on stablecoins. In her opinion, the initiative signals a serious transition to a financial system based on blockchain.

“Some major players, including Elon Musk, are considering issuing their own stablecoins, and Trump’s team sees stablecoins as a way to strengthen the dollar’s status as the global reserve currency,” Chen further explained.

She also discussed the US economy’s situation. America’s Minister of Finance, Scott Bessent, hinted at a controlled economic downturn. If this is true, the expert is sure that Trump’s strategy is clear: blame Biden for the recession, use tariffs and crypto narratives to contain costs and seek to reduce interest rates to stimulate the growth of technology and AI.

“Short-term pain for long-term gain—that’s the plan,” Chen stated.

Since Bitcoin’s position largely depends on macroeconomics, investors have to monitor Trump’s actions.

“Regardless, I don’t see BTC below $70,000, rather $73-78,000, which is a good entry point for those who are hesitant. Within the next 1-2 years, BTC at $200,000 no longer seems impossible,” Chen concluded.

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A prominent crypto analyst said that Bitcoin went through a significant event over the past few months as the coin’s open interest plummeted by nearly 20%, wiping out around $12 billion.

BTC’s open interest wipeout might appear to be detrimental to the coin, but CryptoQuant analyst DarkFost believes that the cleansing is essential for a “bullish continuation”, citing that it may provide opportunities for its investors in the near term if history repeats itself.

Bitcoin’s nearly $12 billion open interest shakeout earlier this month might be just the catalyst needed for the asset to regain its upward momentum, according to a crypto analyst.

A Catalyst

Data from CoinGlass shows that the firstborn crypto’s open interest dropped by 19%, from $61.42 billion to $49.71 billion, citing that the $12-billion shakeout might be a good thing for Bitcoin.

“Following the recent panic triggered by political instability linked to Trump’s decisions, we witnessed a massive liquidation of leveraged positions on Bitcoin,” DarkFost said.

Source: Coinglass

The analyst said more than $10 billion in open interest has been erased in only two months, with an estimated $10 billion wiped out between February 20 and March 4.

DarkFost claimed that the wipeout experienced by BTC earlier this month could serve as the catalyst needed by the coin to regain the momentum that will allow the crypto to move upward. 

“This can be considered as a natural market reset, an essential phase for sustaining a bullish continuation,” the analyst explained.

Good Opportunities

DarkFost suggested that the recent ordeal faced by Bitcoin might prove to be advantageous to the crypto in the next few months.

The analyst provided a chart that shows the reset phases by determining the moments when the 90-day open interest change turns negative, adding that the current 90-day change in Bitcoin futures open interest plummeted and is now sitting at -14%.

“Looking at historical trends, each past deleveraging like this has provided good opportunities for the short to medium term,” the analyst added.

Influence Of The Federal Reserve

Some experts said that the Federal Reserve’s actions might have an impact on what will happen next to Bitcoin.

Today’s meeting of the Federal Open Market Committee could add more volatility to the crypto if there is something unexpected in the monetary policy.

Bitget chief analyst Ryan Lee explained that Bitcoin is already hovering at the $80,000 level and more volatility might be expected in the coin’s price and open interest if the March 19 Federal Open Market Committee meeting delivers any surprises.

“The market largely expects the Fed to hold rates steady, but any unexpected hawkish signals could put pressure on Bitcoin and other risk assets,” Lee said. 

As of press time, Bitcoin’s open interest stood at $49.02 billion, which is approximately a 6.5% increase over the past five days.

Featured image from The Independent, chart from TradingView

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