Bitcoin Tumbles, Brace for a Pullback !!!

Bitcoin Tumbles. Brace for a Pullback.

Bitcoin and other cryptocurrencies were falling Friday as regulatory pressures weighed on sentiment. Crypto traders remain bullish—but big bets on a rebound may only hurt prices in the short term.

The price of Bitcoin has fallen 2% over the past 24 hours to 28100 falling further from the psychologically important 30000 level, which it passed last week for the first time in 10 months. The 30000 zone is viewed as a key because it’s where prices stood last June before a selloff across cryptos accelerated into a brutal bear market. Bitcoin though has struggled to consolidate above that level despite spikes to nearly 31000.

While Bitcoin has fallen this week in line with some weakness in the stock market, it has underperformed against the Dow Jones Industrial Average and S&P 500 amid concerns over the regulatory backdrop in the critical U.S. market. Broker Coinbase Global (ticker: COIN), for its part, has signaled that it is increasingly looking overseas amid a lack of clarity that could hurt the company.

“More traders process the news that Coinbase might end up leaving the U.S. market if they don’t get any regulatory clarity,” said Edward Moya, an analyst at broker Oanda. “Bitcoin will struggle here until we have any regulatory clarity which means prices seem poised to drift lower.”

The ultimate risk traders are eyeing with respect to the Coinbase situation is that if the broker, an influential venue for American retail investor action in crypto, leaves the U.S. it could fuel a slowdown in digital asset trading in a key market. That could weigh on prices.

Macroeconomic forces—primarily inflation and the outlook for interest rates—as well as regulatory pressures remain the driving forces behind crypto prices. After a rally of some 75% so far this year, Bitcoin has been paring gains and looks vulnerable to a correction, though macro or regulatory catalysts could help halt the slide.