Bitcoin has come under pressure, falling 12% on Thursday, due to growing concerns about regulatory scrutiny.
Incoming U.S. Treasury Secretary Janet Yellen, whose nomination will get the Senate Finance Committee vote Friday, pointed to the cryptocurrency earlier this week as a means for “illicit financing.” . These comments sparked fears that the new administration could impose a crackdown on cryptocurrencies.
Any regulation could eliminate 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 more, I think part of that excess liquidity will go away and be moved to another area,” Maley told CNBC’s “Trading Nation” on Thursday. “That could cause a pretty big drop, although I think it’s going to increase in the long run.”
It’s not the only short-term risk for bitcoin, Maley said. After meeting more than 200% in the past six months, Maley said a setback could also occur. For technical confirmation of further disadvantages, Maley is looking to see if he breaches the Jan. 11 lows.
“It would probably take you down from your intraday lows that day, which fell to around $ 30,300, but that would get a lot of momentum money, that short-term momentum money, and you could see a pretty substantial amount a new decline said Maley.
He pointed to $ 25,000 as a possible fund, which would mark a decline of about 50% from its peak in early January. However, he believes that cryptography is a long-term bet that will tend to increase.
“You will see these big moves and big Bitcoin falls, 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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