Bitcoin came under pressure on Thursday and fell 12% due to growing concerns about the regulatory investigation.
Incoming Finance Minister Janet Yellen – whose nomination will be voted on by the Senate Finance Committee on Friday – named the cryptocurrency as a means of ‘illegal financing’ earlier this week. These remarks raised fears that the new government could apply a repression of cryptocurrency.
Matt Maley, chief market strategist at Miller Tabak, said any regulations could flush out some of the funds that flowed into bitcoin.
“If the government comes together and wants to regulate it more, I think some of that excess liquidity is going to move away and move to another area,” Maley told CNBC’s ‘Trading Nation’ on Thursday. “It could cause a reasonable drop, although I think it’s going to be higher in the long run.”
This is not the only short-term risk for bitcoin, Maley said. After rising more than 200% over the past six months, Maley said it could also be the result of a setback. For technical confirmation of more downsides, Maley is watching to see if he breaks his lows on January 11th.
“It’s likely to fall below the intraday lows of that day at around $ 30,300, but it’s going to bail out a lot of this momentum money, this short-term momentum money, and it can see quite a significant further decline. said Maley.
He indicated $ 25,000 as a possible bottom, which will be an approximately 50% retracement since the peak in early January. However, he views the crypto as a long-term bet that will trend higher.
“You’re going to see those big shifts and big declines in bitcoin, so traders will have to be very, very smart, and long-term investors will have to have a very strong stomach,” he said.
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