Crypto Pirates

If rumours are to be believed, Russia's central bank is considering a ban on both cryptocurrency trade and mining.

Moscow has detailed the hazards involved with the sector in a newly released consultation paper. It was mentioned,

"High volatility and the prevalence of fraud in cryptocurrency trading expose investors to the risk of losing a major percentage of their capital and, in the event of leveraged trading, becoming a debtor."

Potential stability risks have been identified

Furthermore, the 'possible financial stability risks' posed by cryptocurrency are greater in emerging nations such as Russia. This is due to the fact that, as it was added,

"Due to a historically larger proclivity for saving in foreign currencies and a lack of financial literacy."

The central bank also stated that all major regulators are issuing consumer warnings describing "excessive risks inherent with cryptocurrency investment." Several agencies have labelled cryptocurrency as "speculative investments" with significant risk. Furthermore, Moscow refers to cryptocurrency values as financial pyramids, which are mostly driven by demand expressed by new market participants.

As a result, its judgement is based on serious concerns that can severely influence retail investors, financial stability, and bring dangers from the usage of cryptocurrency for illegal activities. According to the report,

"Cryptoization, like dollarization, limits monetary policy sovereignty, which may require central banks to maintain a higher key rate indefinitely in order to prevent inflation."

According to the central bank, this also reduces the affordability of lending for both households and enterprises.

Given these hazards, Moscow is likely to outlaw cryptocurrency as a form of payment, as well as trading on exchanges and peer-to-peer platforms. Furthermore, all financial institutions may be prevented from investing in cryptocurrency. TCS Group Holding, a Russian lender, recently acquired Aximetria, a Swiss crypto services provider, to grow into the space. This may have an impact on Russian enterprises that were preparing to invest heavily in the cryptocurrency market.

Problems with power

Taking China and Iran as examples, Russia believes that a complete ban on mining "may be the best option." In response to environmental concerns, Russia stated in its report,

"Cryptocurrency mining causes unproductive electric power consumption, endangering the power supply of residential structures, social infrastructure, and businesses, as well as the implementation of Russia's environmental programme."

More infrastructure and mining machinery are being sought as a result of the increased demand.

It is worth noting that, according to data from the Cambridge Centre for Alternative Finance, Russia is the world's third-largest mining destination, accounting for 11% of global hashrate in August 2021.

And, predictably, the prospect of a ban has skewed market sentiment. At the time of publication, BTC had fallen below $40K and was trading in the $38,000-$40,000 region.

Meanwhile, the worldwide cryptocurrency market worth is down 7% today.

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Advertising is essential for any business, whether through word-of-mouth for small firms, print media, or television commercials. Ads in the Internet age are largely focused on Google, Facebook, YouTube, Twitter, Instagram, and third-party websites.

"Sell the sizzle, not the steak," as the phrase goes.

However, advertising has become a luxury that is being snatched away from bitcoin businesses around the world. "You can sell your Bitcoin, but don't tell anyone," regulators and certain advertising platforms appear to be repeating.

The crypto ad cleanup has reached Singapore, Spain, and the United Kingdom.

The most recent infringement on the freedom to market Bitcoin businesses occurred in Singapore. The Monetary Authority of Singapore (MAS), the country's central bank, recently established new crypto advertising guidelines. The Malaysian Anti-Money Laundering Commission (MAS) has prohibited the promotion of any cryptocurrency items in public areas. In one of the strongest crackdowns to date, these range from billboards to social media.

Is it the basis for prohibiting cryptocurrency advertisements? They trivialise a dangerous endeavour.

According to MAS:

DPT service providers shall not represent DPT trading in a way that minimises the substantial risks of DPT trading, and they should not promote their DPT services in public locations in Singapore or through any other medium geared at the general public in Singapore.

DPTs are digital payment tokens, or simply any other type of cryptocurrency. Exchanges, wallets, brokers, and other Bitcoin firms are no longer permitted to advertise on "public transportation, public transportation venues, broadcast media or periodical publications, third party websites, social media platforms, public events, or roadshows."

Bitcoin firms can only advertise their products through their official social media accounts, and even those posts must follow certain guidelines. They are also barred from utilising social media influencers to promote their products.

When it comes to social media influencers, Spain is paying close attention. The country's financial services authority, known as the Comisión Nacional del Mercado de Valores, recently mandated that influencers provide ten days' notice before advertising any bitcoin product.

According to CNF, influencers must also include the following notice on their posts:

Crypto-asset investments are unregulated. They may not be suitable for retail investors, and the entire investment amount may be lost.

The Advertising Standards Agency in the United Kingdom has likewise increased its crackdown on cryptocurrency advertisements. It recently spat with Arsenal, one of the country's most powerful football clubs, over what it called a deceptive cryptocurrency advertisement. Arsenal promoted its fan tokens on its own website and social media channels, but the ASA deemed the advertisement inappropriate.

Arsenal was forced to remove the advertisement, and in the future, it must make it clear that fan tokens are also crypto-assets and that "the value of investments in crypto-assets was unpredictable and crypto-assets were uncontrolled."

The ASA has taken action against cryptocurrency companies such as Crypto.com, which it claims has encouraged consumers to acquire Bitcoin using credit cards, incurring debt in the process. Other casualties include EToro, Luno, Coinbase Europe, Exmo Exchange, Coinburp, and Payward.

Her Majesty's Treasury has now stepped in. It recently stated that it aims to tighten the laws governing cryptocurrency advertisements in order to ensure that they are consistent with other financial assets.

Why is there a ban on cryptocurrency advertisements?

Regulators are currently clamping down on crypto advertisements. However, in the past, even ad networks have been hostile to crypto adverts.

To mention a few, Google, Facebook, Twitter, and LinkedIn have all banned crypto advertisements, either completely or partially. As the market grew and became more mainstream, they would reverse their decision and lift the bans. Some, such as Facebook, have even returned to the industry they once fought. Facebook, now known as Meta, is working on NFT integration, as CNF previously revealed. Diem is a stablecoin initiative run by the social networking company.

To be sure, there have been a number of fraudulent cryptocurrency projects that have recruited users via advertisements. These were at an all-time high during the ICO phase, which is what the tech behemoths stated as the rationale for banning all crypto advertisements entirely.

However, throwing the baby out with the bathwater is not the solution. Many legitimate businesses that provide real value have been harmed as a result of this strategy, as they have been refused access to advertising networks. This is the same stance that some radicals have taken, stating that because Bitcoin has been used in several ransomware attempts, cryptocurrency should be outright banned.

The most effective strategy is to punish the bad apples. This is something that regulators and even platforms like Google and Facebook do with other businesses. For example, the number of fraudulent FX firms is fairly significant, possibly even greater than in cryptocurrency. However, the technique taken to deal with this is aware that there are more real projects than frauds. So, why not apply the same logic to cryptocurrencies?

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Over 70% of video game employees say their studios have no intention of incorporating bitcoin payments or NFT mechanics into their games. This is the outcome of the Game Developers Conference's (GDC) annual State of the Game Industry survey, which polls industry professionals on their thoughts on gaming industry trends. Even while the majority of respondents do not believe that crypto and NFT integration in the games market is viable, there is a large portion that may be leaning either way in the future.

According to our graph, 21% of survey respondents stated that their studios were interested in combining NFT and bitcoin capabilities. With Facebook, Twitter, and Instagram embracing blockchain technology and lately announcing plans for or already implementing NFT profile images, it's possible that other video game studios may follow suit in the future. Traditional gaming businesses' first forays into the NFT industry were fraught with controversy. The release of Ubisoft Quartz and its individualised cosmetic goods has received a dismal reaction, with items selling for only a few dollars each, while developer GSC Gameworld has shelved their intentions to incorporate NFTs into their future action game Stalker 2 due to public backlash. This mindset is reflected in selected comments from the GDC poll, with people labelling NFTs as a "pyramid scheme," a "scam," and a "tech looking for purpose" that is "totally motivated by avarice."

According to a recent global study conducted by Finder, 11.6 percent of respondents own NFTs, with an additional 9.4 wanting to purchase one in the near future. The Philippines, Thailand, and Malaysia have the highest proportion of NFT owners. According to Financial Times reporting, playing NFT games like Axie Infinity is considered a legal way to earn an income in these countries, despite the fact that around 80% of all value ascribed to NFTs is controlled by 9% of the population. These figures raise the question of whether the current version of NFTs is, in fact, a pyramid scheme benefiting only a limited number of people.

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Crypto supporters point to the Fed's interest rate hike, Wall Street, and Russia as the primary causes of the $500 billion crypto market wipe out.

Earlier Friday, the crypto market lost approximately $500 billion in combined market capitalisation. The market slaughter resulted in the liquidation of nearly $700 million in leading crypto assets. Bitcoin (BTC) has fallen below the critical support level of $40 thousand, while Ether (ETH) has also lost $3 thousand.

Many wild hypotheses have filled the internet to make sense of the drop, at a time when crypto supporters are discussing whether the crypto market has entered a bear phase. We'll look at three of these theories, which many believe contributed to the crypto market fall.

The following are the inflation measures used by the Federal Reserve Bank of the United States:

Consumer inflation in the United States has reached new highs, and the Federal Open Market Committee (FOMC) meeting on January 25–26 is expected to announce new interest rates. The Fed is forecast to raise interest rates three times this year, with increases ranging from 0.25 percent to 1 percent by the end of the year. Many market analysts feel that the growing anxiety about inflation, combined with the omicron's surge, has led to a sell-off on Wall Street, which has eventually trickled down to the crypto market.

According to one Redditor, crypto was invented to conceal asset inflation by creating another "pipeline" for the US dollar to flow through in order to inflate a different asset. The user Juicyjuicejuic commented:

"Crypto produces the ideal trading vehicle for a brief period of time before becoming the scapegoat for whatever crash is on the way."

The user went on to say that the cryptocurrency market's volatility is the reason "why bonds and stocks are plummeting because everyone gambled on crypto and moved money out of other assets to do so!"

The rising link between the Bitcoin market and Wall Street

Market analysts believe the growing correlation of Bitcoin with the equity market may have driven the prior fall. BTC has gotten more linked with the equities markets as a result of ETFs and institutional investors. The Bitcoin market has followed Wall Street's lead.

Russian central bank proposes a total ban on cryptocurrency

Another notion that appears to be gaining support is a recent report from Russia's central bank calling for a complete ban on crypto mining and trade. According to Cointelegraph, the Russian central bank compared Bitcoin to a pyramid scheme and sought an immediate ban on its use in Russia. The central bank also cautioned that cryptocurrency might jeopardise the country's financial sovereignty.

Russia has become the third largest Bitcoin mining hub, and many believe the central bank's proposal for a blanket ban has caused a May 2021-style market FUD, resulting to a sell-off.

The first significant crash of 2022 has triggered a selling wave in the crypto market; yet, professional traders continue to urge for hodling, claiming that a drop of up to 30% is not concerning in a bull market.

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Bitcoin fell more than 10% to below $40,000 on Friday, with the rest of the cryptocurrency market following suit as risk aversion triggered a downdraft for markets ahead of the Federal Reserve's widely anticipated interest rate hike.

With Russia's intention to prohibit crypto assets lighting the fire for the latest drop, Bitcoin's price movements have become inextricably linked to technology shares, which have plunged on rate rise worries. The Nasdaq fell deeper into correction territory on Friday after Netflix stunned investors with weaker-than-expected subscriber growth.

Bitcoin has been "struck by another wave of risk aversion in the markets," according to Oanda analyst Craig Erlam, falling below a critical level of technical resistance near $40,000, where bulls and bears had struggled for days.

Separately, cryptocurrency exchange Kraken placed the bear case for Bitcoin at $26,300. Kraken said in its 2022 cryptocurrency market intelligence report that the crypto market as a general isn't likely to do as well this year as it did last, when Bitcoin soared to a record of almost $67,000.

Ethereum (ETH), one of the hottest digital coin trades that has skyrocketed in popularity because to the non-fungible token (NFT) bubble, has dropped more than 12% and now trades below $3,000. Other smart contract layer-1 coins like as Cardano (ADA), Terra (LUNA), Polkadot (DOT), and Solana (SOL) all fell by double digits in intraday trade.

"Greater rate hikes would generally generate more pain for risk-on assets, and Bitcoin in particular," said Chris Matta, president of 3iQ Digital Assets US. The leading digital coin generally benefits from expansionary monetary policy, but it is presently being pummelling by forecasts of a more hawkish Fed.

According to Matta, even though Bitcoin is still viewed as an inflationary hedge by some investors, the Fed's move to kerb inflation "isn't going to place it at the top of the list" of many crypto investors.

Regulatory uncertainties, as well as the crypto market's top-heavy derivatives fueled by speculation, are also weighing hard on the market. According to Coinglass, around 200,000 derivatives positions were liquidated in the last 24 hours, resulting in losses totalling more than $800 million and climbing.

Those liquidations aided the selloff, with 82 percent occurring on the bull side, but Matta contended that derivatives did not cause this decline.

According to statistics from The Block Research, most funding rates in crypto futures have leant to the short-seller side during the last two weeks.

"Given the uncertainties around rapid rate hikes right now, I believe we will see significant sell-offs, potentially bringing Bitcoin down to $35,000 or lower." "It's not over yet," Matta remarked.

Further sell-offs within the sector might result from the selling of reserve assets by Decentralised Autonomous Organisations (DAOs) and cryptocurrency miners, he suggested, since they may need to lose more capital to satisfy operating costs.

According to Coingecko, OlympusDAO's token (OHM) has sold off more than 30% from a market valuation of $4.3 billion to little over $827 million since the beginning of December.

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According to a new report from Crypto.com, global cryptocurrency users could reach a billion by the end of 2022.

A ray of hope has appeared for bruised Bitcoin bulls. Global cryptocurrency users could reach one billion by the end of 2022, according to a promising report from Crypto.com.

The paper concludes that a combination of developing nations following El Salvador's orange-pilled lead and adopting a "friendlier approach" towards the crypto business means that "Nations can no longer afford to ignore the public's growing embrace of crypto."

In 2021, the global cryptocurrency population grew by 178 percent, from 106 million in January to 295 million in December. While 2021 began with Tesla and Mastercard embracing crypto payments and acceptance, BTC growth accelerated in the second half of the year, effectively outpacing Ethereum adoption.

August was a banner month for adoption in the run-up to El Salvador's Bitcoin legal tender law.

Crypto.com believes that "if we assume a similar rate of growth in 2022, we are on track to reach 1 billion crypto users by the end of 2022."

To get there, though, it will take more than one Latin American country adopting Bitcoin and some sensible crypto regulation in the United States.

Fortunately, a recent Fidelity analysis concurs on nation-state acceptance, stating that they "would not be surprised" to see additional governments embrace BTC by 2022. The judgement is still out on the second part of the Crypto.com prediction regarding a more favourable posture towards crypto.

Given the continued rejection of a US Bitcoin ETF and the latest US crypto mining hearing, Crypto.com's predictions are a saving grace. As price action continues to grind lower, the report provides much-needed hope for hodlers.

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According to CoinDesk, El Salvador's government intends to offer $10 million in cryptocurrency loans to small and medium-sized businesses this quarter.

According to the report, the country would join with Solana-based lending platform Acumen to offer loans to El Salvador's National Commission for Micro and Small Enterprises (Conamype).

According to Andrea Gómez, project manager at Acumen, the loans would have an annual interest rate of between 6% and 7%, but might go as high as 10%.

That is a fraction of the average annual rate of 2,300 percent that firms, the majority of which operate in the informal economy, pay unregistered lenders for loans, Conamype President Paul Steiner said.

Acumen will convert cryptocurrencies to stablecoins, such as USDC or tether, and then deliver US dollars to Conamype, which will distribute the loans to Salvadoran firms and entrepreneurs.

Gómez stated that Acumen has 15,000 subscribers and was just approved as a lender by the Central Bank of El Salvador.

The crypto loans are President Nayib Bukele's latest attempt to mainstream cryptocurrencies in El Salvador, which made bitcoin legal tender in September. Soon afterwards, he revealed plans to develop the world's first "Bitcoin City," which would mine bitcoin using geothermal energy generated by a volcano, as well as the launch of a "bitcoin bond." Additionally, Bukele has stated when El Salvador will "buy the dip" through bitcoin purchases.

However, earlier this week, credit rating firm Moody's cautioned that the country's bitcoin holdings could increase its default risk, prompting Bukele to respond on Twitter. Cathie Wood of Ark Invest, on the other hand, praised El Salvador's bitcoin drive, noting that the innovation is improving people's lives.

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After teasing final figures throughout the week, Crypto.com has issued an official statement regarding the incident that resulted in the suspension of its users' ability to withdraw funds.

"In the majority of cases, we were able to prevent the unlawful withdrawal, and in all other instances, consumers received a full refund," the business stated.

On Monday, the business reported that 483 individuals had their accounts compromised due to illicit cryptocurrency withdrawals.

"Unauthorised withdrawals totalled 4,836.26 Ethereum, 443.93 Bitcoin, and almost US$66,200 in other cryptocurrencies."

At the time of press, ether's market capitalisation was just shy of $14 million, while bitcoin's fiat value was slightly more than $17 million. In total, this brings the amount to about $31 million, depending on the day's unpredictable cryptocurrency prices.

Crypto.com stated that it observed transactions in the early hours of Monday morning UTC that did not require users' two-factor authentication.

"Crypto.com revoked all customer two-factor authentication tokens and enhanced security hardening measures, requiring all customers to re-login and configure their two-factor authentication token to ensure only permitted activity occurred. "Approximately 14 hours of downtime occurred for the withdrawal infrastructure," it stated.

Additionally, the business announced a new policy requiring customers to wait 24 hours before making their first withdrawal to a whitelisted address, as well as a scheme that will refund consumers up to $250,000 if they make illegal withdrawals provided certain conditions are met.

"As a precaution, we redesigned and transitioned to a whole new two-factor authentication system."

These rules require customers to employ multi-factor authentication on all transactions when practicable, create an anti-phishing code at least 21 days before to the unauthorised withdrawal, submit a police report and send a copy to the corporation, and complete a "questionnaire to aid in a forensic investigation."

"Conditions and terms vary per market in accordance with local rules. "The final assessment of eligibility requirements and claim clearance will be made by Crypto.com," the business stated.

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By publishing a hazy outline of potential benefits and drawbacks on Thursday, the Federal Reserve took the first step towards exploring a digital currency.

The difficult aspect will be for the Fed to figure out how to develop a central bank digital coin (CBDC) that satisfies Congress and the White House while seamlessly integrating into the payment and banking systems.

The Fed maintains that it will not proceed without the "unambiguous backing" of the executive and legislative branches, "preferably in the form of a formal authorising law," Fed officials stated in the CBDC report.

Congress looks to be largely receptive to authorising a CBDC, though the Fed will need to iron out issues in order to satisfy both parties. A White House spokeswoman did not immediately respond to a request for comment from Yahoo Finance.

Senator Sherrod Brown, chairman of the Senate Financial Committee, described the Fed's study as a positive first step towards developing a central bank digital currency that will attract more Americans to our banking system. "I'm looking forwards to collaborating with the Federal Reserve and the Biden Administration to guarantee that workers, small businesses, community banks, and credit unions may continue to engage in our digital economy," Brown said.

Separately, Republican Senator Pat Toomey, a ranking member of the Banking Committee, said he is "encouraged" by the report, which he describes as "an important move by the Fed in recognising the permanency of cryptocurrencies and their underlying technologies."

He did, however, raise reservations about the Fed's approach to protecting Americans' privacy.

"I'm concerned that the Fed has not articulated how it intends to safeguard customer transaction data," he added. "I'm also not sure if the Fed's report implies that a CBDC would prohibit direct peer-to-peer transactions. This is a critical trait."

Toomey previously sought assurances from Federal Reserve Chairman Jerome Powell regarding ensuring individual privacy protections as the Fed considers designing a CBDC. Powell answered that he "strongly believes [s] that individual privacy should be a primary consideration in the architecture of any possible CBDC" and that he would request comments.

'Refrain from holding your breath'

According to Michael Feroli, chief US economist at JPMorgan, obtaining approval for a CBDC will be difficult. He cited the Fed's stance that it would issue a CBDC only with the explicit endorsement of the executive branch and Congress, which remains impasse on a number of crucial issues central to the Biden administration's agenda.

"That appears to be a long shot in the current political environment," Feroli wrote in a message to investors titled sarcastically, "Don't hold your breath waiting for Fedcoin."

Feroli also noted that the report's lack of precise suggestions was likely attributable to a Fed disagreement over whether creating a CBDC is worthwhile. Nonetheless, Cowen analyst Jaret Seiburg believes it is an issue of when, not if, rather than if.

A digital currency is "inevitable," Seiburg added, "yet the Fed is avoiding taking a position." "However, it appears that we will have to wait at least another three to five years before launching a pilot programme."

A possible wild card is the Federal Reserve's impending quick payment system, Fed Now, which is scheduled to start next year, according to the expert. This will provide many of the same benefits as a digital dollar, particularly fast settlement of transactions.

"Rapid consumer and merchant acceptance of Fed Now might fulfil many of the market dynamics pushing the Fed towards a digital currency," Seiburg remarked. However, he continued, a CBDC may be preferable to expedite international payments, particularly for global trade, and to ensure the dollar stays the reserve currency.

CBDC of the Federal Reserve and private crypto

The recent collapse of cryptocurrency prices, with Bitcoin and Ether plummeting by double digits, highlighted the dangers of the central bank intervening in a notoriously volatile sector. Many traders in the cryptocurrency space are selling to shelter in stablecoins; a CBDC may serve as a competitor to private stablecoins and a go-to in times of market turbulence and uncertainty.

"A digital dollar will have a significant advantage over non-CBDC stablecoins," argues Salman Banaei, Chainalysis's Head of Public Policy for North America. He suggested that the former would have "almost no credit or liquidity risk" and would be the "easiest to use USD stablecoin" due to its widespread acceptance throughout the financial system.

He noted that a CBDC would be the safest digital asset available to the general people, as it would be a liability on the Fed's balance sheet, rather than on the balance sheet of a commercial bank, which is regarded riskier.

"It would be the most attractive method of storing cash, particularly during periods of market volatility when the trustworthiness of a bank or other financial institution might be called into question," Banaei noted.

Additionally, the analyst indicated that worldwide standards for payment settlement would offer a strong incentive for the digital dollar to be used to settle payments and financial activities.

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With every major coin bearing the brunt of the crash, here are the likely causes and what to anticipate next.

Although the market has not yet closed, it is reasonable to conclude that January 21 became the month's 'Black Friday.' With market losses totalling $137 billion in the last 24 hours, here are several plausible explanations.

1. Market Liquidations Driven by Bitcoin

Today's market saw one of the greatest single-day liquidations in history, with about $880 million worth of liquidations reported from the market's opening to the time of this report.

Bitcoin was the most liquidated contract, with close to $175 million in liquidated contracts. This is one of the primary variables that contribute to a market crash. Previously, on every significant liquidation, Bitcoin formed a massive red candle, cascading its effect across the rest of the market.

2. Russia's Cryptocurrency Prohibition

Today, one of the world's largest economies proposed prohibiting the use and mining of cryptocurrencies on Russian soil. According to them, cryptocurrencies posed a threat to financial stability, and the prohibition was motivated by concerns for residents' welfare and the country's monetary policy autonomy.

This was one of the most significant blows to the global cryptocurrency sector following China's ban, as Russia is the world's third largest Bitcoin miner, raising environmental concerns. The bank stated directly,

"The optimal option is to prohibit cryptocurrency mining in Russia."

3. Wall Street's Dive

The stock market in the United States of America has historically had a substantial impact on the cryptocurrency market, and for the same reason, it would not be surprising if that continues to be the case today. The S&P 500 Index has dropped over 4% in the last 72 hours.

Plus, with a correlation of 0.59 between Bitcoin and the SPX, the dips were destined to effect one another, which they most likely did.

What About the High-Priced Coins?

At the time of press, nearly all of the top ten cryptocurrencies were trading within the 10% range, with Bitcoin losing nearly 7.83 percent. Not only did it breach the $40.5k support level, but it also tested the critical $38k barrier.

Fortunately, BTC has maintained a price above it, now trading at $38,310 at press time, and as long as it remains inside that range, the market will remain stable.

While Ethereum did not lose its important support level of $2727, it was trading close to it at the time of this report, at $2789, after losing over 11% throughout the day.

Finally, Binance Coin (BNB), the token of the world's largest cryptocurrency exchange, fell close to 11.32 percent but was trading far away at $418, well above its important support level of $399.

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