Bitcoin just can’t break free from its $6,000 level.
Another pullback on Tuesday dragged it back down near the lows of the year and spooked crypto investors already fearful of a pervasive sell-off.
One bitcoin bear is holding out for change in the cryptocurrency market.
“After the move we’ve seen it’s very difficult in the short term to be bullish,” Todd Colvin, analyst at Ambrosino Brothers, told CNBC’s “Futures Now” on Tuesday.
There is one thing that could turn Colvin from bearish to bullish: clarity. To rally, bitcoin needs to see clarity on factors such as security, regulation and accessibility.
More transparent and improved security, for example, could entice a risk-averse crowd, says Colvin.
Hacks and security breaches are “the things that cause these bear markets, when you have these, 'Oops, somebody robbed my wallet off an exchange.' That caused the last big $1,000 decline we had,” he explained.
Two South Korean crypto exchanges, Coinrail and Bithumb, reported hacks in June. Those breaches contributed to a shift in sentiment that sent bitcoin prices from close to $7,000 to below $6,000 in late June.
Government oversight is still up in the air, a concern to investors of a cryptocurrency that promotes its independence and lack of barriers. Colvin sees a clearer sense on how world governments might regulate cryptos as a positive.
“Right now the government doesn’t really know how to define or quantify what bitcoin is. They don’t call it a security, so it doesn’t fall under the SEC umbrella,” said Colvin. “It’s still very confusing.”
Limited access to bitcoin also keeps a cap on higher prices over the longer term, says Colvin.
“There is demand for this type of product. It’s just that nobody can get their hands on it,” he said, pointing to high demand for alternative ways to invest in the coin such as the GBTC Bitcoin Investment Trust. “More accessibility will bring higher bitcoin prices over the long term.”
The next “psychological level” Colvin is watching for is $5,000. Bitcoin has not traded below that level since October 2017.
“That’s pretty far away from where we’re trading today, but in bitcoin speak it really isn’t because we’ve moved massive amounts,” said Colvin. “Five thousand [dollars] is definitely a line in the sand where I think sophisticated investors will step in.”
Bitcoin moved more than 4 percent lower on Tuesday to trade at $6,373. It has fallen around 70 percent from its December peak.