Bitcoin (BTC) shows positive signs in the long-term but investors will need to have a “very strong stomach” to survive through short-term volatility, an analyst is warning.
What Happened: Miller Tabak chief market strategist Matt Maley told CNBC on Thursday that regulatory risks and pullback from the near 200% surge this year mean Bitcoin could see a further drop in the short-term.
“If the government comes along and wants to regulate that more, I think that some of this excess liquidity is going to move away and move to another area,” Maley said on CNBC’s “Trading Nation” show.
That combined with the pullback could cause “a fairly significant drop,” but the analyst still thinks the apex cryptocurrency is “going higher long-term.”
Maley says that $25,000 could be a possible bottom for Bitcoin, which is about 40% lower than the $41,999 all-time high the cryptocurrency hit on Jan. 8.
“You’re going to see those big moves and big declines in bitcoin, so traders are going to have to be very, very nimble, and long-term investors are going to have to have a very strong stomach,” the analyst told CNBC.
Why It Matters: Bitcoin has seen a major correction in the last two weeks after a dizzying rally that started in July last year saw it cross $40,000 from trading below the $10,000 level.
Treasury Secretary Janet Yellen earlier this week expressed concerns over the use of cryptocurrencies in funding illicit activities, giving investors concerns over potential incoming unfavorable regulations in the U.S. under the administration of President Joe Biden.
Price Action: Bitcoin traded 11.3% lower at $30,712.41 at press time on Thursday.
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