How does regulatory uncertainty affect Bitcoin investments?

Regulatory uncertainty can significantly influence Bitcoin investments by creating an unpredictable environment for investors. When rules are unclear or subject to change, it can lead to more price swings as investors react to potential risks. This uncertainty might cause hesitation among big investors, potentially reducing the influx of money into the Bitcoin market.

Additionally, fears of strict regulations, like bans on trading or mining, can cause panic selling and sharp price drops. On the other hand, positive regulatory news can boost confidence and drive prices up. Overall, unclear regulatory landscapes make it tough for investors to plan long-term and increase the risks associated with Bitcoin.