The cryptocurrency market faced a significant downturn as Japan announced a proposed 20% flat tax on crypto gains. This news led to a 5% drop in Bitcoin and Ethereum prices, with Bitcoin falling to $86,523 and Ethereum trading at $2,836. The market reaction was further exacerbated by the People’s Bank of China reiterating that virtual assets are not recognized as legal tender. In addition to Bitcoin and Ethereum, major altcoins such as Zcash and Ethena experienced substantial declines, dropping 22% and 17% respectively. Despite the overall bearish trend, some small-cap tokens managed to post gains, highlighting the market's volatility amid regulatory developments.