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Another Crypto Flash Crash

Another Flash Crash As Russian Central Bank Moots Crypto Ban

By RTTNews Staff Writer | Published: 1/21/2022 9:26 AM ET

Crypto prices crashed again in the wee hours of Friday after reports emerged of the Russian Central Bank calling for a ban on crypto, in a report titled Cryptocurrency Risks and Possible Regulatory Measures. The bank has reportedly described cryptocurrency as a pyramid scheme and warned that it was destabilizing because its growth was driven primarily by speculation.

Crypto market capitalization has recovered to $1.8 trillion after falling to as low as $1.77 trillion. The market cap is almost 40 percent below the peak market capitalization of $2.97 trillion touched in mid-November of 2021.

Bitcoin dominates 40.4 percent of the cryptocurrency market, followed by Ethereum which commands an 18.5 percent market share. The remaining altcoins occupy 41.1 percent of the overall cryptocurrency market. The 0.4 percent dip in Ethereum’s market share in the past 24-hours has been equally cornered by Bitcoin and the residual altcoins.

Bitcoin has fallen by a whopping 8.8 percent overnight to $38,321.58. It touched a 24-hour low of $37,945.56 and at current levels, only 57 percent of the holders are in-the money. BTC has fallen 44 percent from the peak seen in last November.

Ethereum has fallen to $2,787.11 consequent to a 11.3 percent overnight dip in prices. ETH has touched a 24-hour low of $2,757.74. At current prices, 60 percent of holders alone are in-the-money. ETH too has plunged around 44 percent from the record levels touched in last November.

While Bitcoin has retained the 10th slot as per global ranking of all assets published by companiesmarketcap.com, Ethereum has slipped to the 32nd slot. With the flash crash, Ethereum has fallen from rank 29 recorded since January 10, as Palladium (precious metal), Mastercard and Roche have surged past in market capitalization.

40th ranked Unus Sed Leo (LEO, 2.81%), 49th ranked BitTorrent (BTT,1.65%) and 93rd ranked Bancor (BNT,14.35%) are the only survivors (excluding stablecoins) among the top-100 cryptocurrencies, gaining from Thursday’s levels. And the only cryptocurrencies among the top-100 that are positive on a weekly basis are BitTorrent (BTT) and Bancor (BNT).

Among the top-20 cryptocurrencies, losses recorded by Ethereum (11.3%), BNB (9.99%), Cardano (11.20%), Solana (14.11%), Terra (9.77%), Polkadot (11.03%), Avalanche (14.21%), Polygon (11.52%), SHIBA INU (10.15%) and Crypto.com Coin (11.17%) exceed the overall crypto market decline of 9.58 percent.

In the category-wise market capitalization dominance, Smart Contracts aggregate to 28.83 percent; DeFi is at 7.91 percent; Centralized Exchanges add up to 5.34 percent; Web 3 sums up to 3.36 percent; Research grosses 2.98 percent; NFTs account for 2.35 percent; Memes command 1.95 percent; Scaling enjoys 1.84 percent; Decentralized Exchanges amount to 1.65 percent; Metaverse commands 1.55 percent; while Gaming follows with 1.39 percent market capitalization.

Stablecoins increased market dominance to 9.17 percent from 8.5 percent, a day ago and before the flash-crash. Meme category dominance too has increased to 1.95 percent, from 1.92 percent a day ago.

Meanwhile, the U.S. Federal Reserve has released a Whitepaper on a CBDC (Central Bank Digital currency) or a Digital Dollar. The report titled Money and Payments: The U.S. Dollar in the Age of Digital Transformation invites comments from the public on 22 questions, to be furnished within 120 days. The questions span areas regarding CBDC design, benefits, risks, policy considerations etc.

The much-anticipated Congressional hearing on cryptos appears to have passed off moderately. The energy-intensive proof-of-work consensus employed by Bitcoin got more scrutiny than Ethereum, that is expected to transition to a proof-of-stake mode this year. The concerns over energy consumption assume significance in the backdrop of increase in mining activities in the U.S, post China’s clampdown on such activities. The U.S. now enjoys the top rank in hash-rate.

Even though digital assets exist on a decentralized network, policy makers have trained their guns on this area, given its potential to disrupt monetary policy across the globe.

This overarching arm of regulatory control is the biggest concern that cryptocurrencies face. Howsoever decentralized the crypto world is, it would not be easy to overlook the realm of regulatory influence. Nevertheless, whether the regulatory control has a lasting influence on prices is worth debating as many cryptocurrencies have in the recent past overcome clampdown shocks and scaled fresh peaks.

For comments and feedback contact: editorial@rttnews.com

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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe

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