Bitcoin came under pressure, falling 12% on Thursday, due to growing concerns about regulatory control.
U.S. Treasury Secretary Janet Yellen – whose nomination will receive a vote from 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 administration could impose a crackdown on cryptocurrencies.
Any regulation could eliminate some of the funds that have entered 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 some of that excess liquidity will move away and move to another area,” Maley told CNBC’s Trading Nation on Thursday. “This could cause a pretty significant drop, even if I think it will increase in the long run.”
It’s not the only short-term risk for bitcoin, Maley said. After collecting more than 200% in the last six months, Maley said it could be due to a withdrawal. For the technical confirmation of a bigger disadvantage, Maley is looking to see if he violates his January 11 lows.
“It would probably take a drop below its daily lows that day, which dropped to around $ 30,300, but that would get a lot of this boost money, this short-term boost money, to get paid bail and could see further decline, “Maley said.
He identified $ 25,000 as possible, which would mark a withdrawal of about 50% from its peak in early January. However, he sees the crypto as a long-term bet that will evolve above.
“You will see those big moves and big declines 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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