There is a bloodbath in the crypto market as reports came out that Russia is going to ban crypto. More than 7% of the global capitalization of the market has evaporated in a single day and the king of the market has fallen below $40k to almost $38k – which is the coin’s six-month low. The market is in a disarray and where once the market was expected to cross $3 trillion in capitalization, it is currently valuated at $1.85 trillion – at its fourth-month low.
The crypto fear & greed index is indicating extreme fear in the market as investors liquidate their holdings in the fear of a further decline in cryptocurrencies. Most major cryptocurrencies have lost a significant chunk of their value and numbers continues at red in the market.
Russia ban crypto?
Russia is the third largest miner of cryptocurrencies in the world and yesterday the central bank of Russia proposed a blanket ban on the creation as well as the use of all cryptocurrencies in the country. The report details about the threat that cryptocurrencies pose to the financial ecosystem worldwide especially in emerging markets – including Russia. Moreover, mining also deviates from the country’s green agenda. While Bitcoin did not initially react to the news of the ban, it has now more than reacted. The current crypto market crash is regarded partly to the announcement of the ban.
Why is the crypto market crashing?
Apart from the news of the proposed Russian ban on crypto, the stock market is also regarded to be closely tied to the crash of the crypto market. As witnessed during the crash of 2008, the global financial crisis and the crash of the stock market led to a brutal fall of cryptocurrencies. It is expected that if the S&P index falls by more than 39%, Bitcoin may see low levels not seen in a year.
The stock market is regarded to be in a super bubble by various analysts to be in a super bubble which resembles the Dotcom bubble. Minor downside movements have been recorded at major stock indices and estimations place the loss to go as high as 50%. If this scenario plays out, the crypto market will follow suit.
However, there is a slight indication of the reversal of the crypto market crash. It has yet to be confirmed but the downtrend may reverse soon.
