Bitcoin is under pressure, dropping 12% on Thursday, due to growing concerns about regulatory scrutiny.
New US Treasury Secretary Janet Yellen – whose nomination will be voted on by the Senate Finance Committee on Friday – signaled the cryptocurrency earlier this week as a means of “illicit financing”. These comments sparked fears that the new government could impose a crackdown on cryptocurrencies.
Any regulation could release some of the funds that have flowed into bitcoin in recent months, said Matt Maley, chief market strategist at Miller Tabak.
“If the government comes and wants to regulate this further, I think some of that excess liquidity will move to another area,” Maley told CNBC’s “Trading Nation” on Thursday. “This could cause a very significant drop, although I think it will increase in the long run.”
It is not the only short-term risk for bitcoin, said Maley. After recovering more than 200% in the past six months, Maley said there may also be a downturn. For further technical confirmation of disadvantages, Maley is watching the January 11 lows break.
“It would probably fall below its intraday low from that day, which is around $ 30,300, but that would cause a lot of that momentum money, that short-term momentum money, to be redeemed, and there could be an additional decline,” said Maley.
He pointed to $ 25,000 as a possible minimum, which would mark a retraction of approximately 50% since its peak in early January. However, he sees cryptography as a bullish long-term bet.
“You will see these big moves and big falls in bitcoin, so traders will have to be very, very agile, and long-term investors will have to have a very strong stomach,” he said.
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