The Central Bank of Russia (CBR) has published a report proposing a ban on cryptocurrencies in the Russian Federation. The cryptocurrency market reacted with a 10% collapse.
The capitalization of the cryptocurrency market decreased from $2.045 trillion to $1.82 trillion in 10 hours. During the same time, bitcoin dropped from $43.35K to $38.62K, by 10%. Ethereum collapsed even more, by almost 13%, from $3,376 to $2,827, according to Coinmarketcap. ETH trading volume has more than doubled, from $9 trillion to $19 trillion, due to panic sales, experts say. Whales are buying. According to Bloomberg, the amount of cryptocurrency assets owned by Russian citizens exceeds $92 billion.
The Central Bank of the Russian Federation is currently studying the activities of Russian banks that interact with cryptocurrency exchanges and exchangers. Tightening regulation of cryptocurrencies has been going on in Russia for several months. The Central Bank has previously stated that cryptocurrencies pose a danger to the financial stability of Russia.
So far, tough decisions on cryptocurrencies have not been made in Russia due to the risk of disconnecting Russian banks from SWIFT. Cryptocurrencies in this case could become one of the options for international transactions. Four days ago, the media reported that the US and EU authorities are no longer considering the issue of disconnecting Russia from SWIFT.
Experts note that the ban on cryptocurrencies may also be related to the activities of the Binance exchange, which has hired former Russian government officials meaning to develop business in Russia. Binance was also the first exchange that expressed the wish to cooperate with the Central Bank of Russia after the publication of the report. The representative of the Central Bank then clarified that the regulator does not impose a ban on cryptocurrency ownership for citizens. Obviously, the ban applies to large institutional investors.
Cryptocurrency market experts note that in the near future there will be a bounce of the leading cryptocurrencies after the first fear will pass away. Popular analyst Nicholas Merten (aka DataDash) notes that the whales have already used the market fall for large buys, and in the near future prices will come back to previous values. The expert states:
– They [whales] are going to drive the price higher and cause even more pain liquidations for the emotional traders.
Institutions like to buy lows, according to Nicholas Merten, so the return of the rally is highly likely. And there will be a reversal at the end of a final flush, he says.