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Cryptocurrencies tumble after China's latest crackdown. Here's why traders see opportunity

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Where bitcoin heads next after China's latest cryptocurrency crackdown

Bitcoin and other cryptocurrencies sold off Friday after China took a hard line against the space.

The People's Bank of China in a Q&A overnight called all crypto-related activities illegal — the latest in a regulatory crackdown that had previously targeted activities such as mining.

Craig Johnson, chief market technician at Piper Sandler, said the latest announcement is more bark than bite.

"The whole discussion that this is going to be made illegal, I don't think that's ultimately going to play out. We've heard this time in and time out," Johnson told CNBC's "Trading Nation" on Friday, alluding to previous moves in 2013 and 2017 to wrest control over digital currencies.

Johnson, who mines bitcoin, said this weakness offers an entry point to get into bitcoin at a lower price.

"This little lower high in here, it's going to be an opportunity here where I'm going to be wanting to buy on these pullbacks," said Johnson.

In a separate email to CNBC, he highlighted $41,000 as a level of support. Bitcoin traded Friday at $42,500.

Danielle Shay, director of options trading at Simpler Trading, is also bullish on the space and identifies the 50-day moving averages for bitcoin and ethereum as supportive. Both traded right around that short-term trendline on Friday.

"They have consolidation on those daily charts," Shay said during the same interview. "I think [they're] a buy — ethereum, in particular. I'm looking at ethereum to trade up into resistance, around the $4,000 coin price point. And if it can break through that area, I think we can see new highs."

Ethereum traded Friday at $2,920. A move to $4,000 implies nearly 40% upside.

Disclosure: Danielle Shay holds bitcoin and ethereum.

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