3 reasons why the CFTC action against BitMEX will not crash Bitcoin price

Within the last few hours Bitcoin price plummeted as the U.S. Commodities and Futures Trading Commission charged BitMEX with facilitating money laundering and operating an illegal cryptocurrency derivatives exchange.

An even larger shock occurred as authorities announced the arrest of Samuel Reed, one of the co-founders of BitMEX.BitMEX has been the most dominant Bitcoin futures exchange for a long time, at least until March 2020 when the massive $1 billion Black Thursday liquidation pulled the price below $3,750.

There are several factors that could aid the recovery of Bitcoin in the short term.

Bitcoin sees a rapid and intense fall in a short periodThe price of Bitcoin declined by more than 4% in two hours, a level of volatility it does not typically see.

Usually, when Bitcoin falls with such intensity, it causes a cascade of liquidations.

History shows regulation-induced downturns are points of recoveryOver the years the cryptocurrency market has endured many negative regulatory actions enacted by governments across the world as Bitcoin researcher Vijay Boyapati says, BTC strongly recovered from each one.

"The Bitcoin market has always reacted negatively to major exchange issues or government confiscations. Historically this has always presented a great buying opportunity for Bitcoin. The Department of Justice action against BitMEX will be no different."

Bitcoin dropped below it briefly at times but quickly rebounded above it and this shows traders are confident that Bitcoin price will be higher in the future.

Currently, traders are suggesting that the short-term trend of Bitcoin remains cautious but neutral in the medium term.

At the time of writing, Bitcoin price continues to trade within a symmetrical triangle and the $10,500 level is holding as support.