Bitcoin buyer beware: The crypto carnage could continue, says a real currency strategist

Bitcoin saw one of its most dramatic recent price swings yet on Friday, plunging as low as $10,400 per coin and prompting Coinbase to briefly disable trading.

While this price action may encourage some to pile in and purchase the cryptocurrency at what appears to be a discount (or "buy the dip"), one foreign exchange strategist has a clear-cut message: Don't.

Boris Schlossberg, foreign exchange strategist at BK Asset Management, said the volatility could continue over the coming week and he wouldn't step in here to buy. Here are his reasons.

• Bitcoin as a speculative product has captivated investors this year. The price swings over the last several trading days have proved particularly volatile.

• Further downside could impact investor sentiment and physical holdings as traders may liquidate their positions and positions in more traditional markets.

• Amid muted volatility in other capital markets, bitcoin could see volatility in the coming days.

• The $10,000 level appears to be the cryptocurrency's floor, as it marked a breakout just three weeks ago and bitcoin hovered about the level today.

Bottom line: Buying bitcoin here would be like trying to catch a falling knife, according to Schlossberg.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect