Crypto's slide after days of declines in Bitcoin and other major cryptocurrencies is being driven by leverage and forced liquidations, triggering a "mass sell-off among traders," but the volatility can change with pending Senate legislation, Paul Powers, CEO of Physna, said on Newsmax Tuesday.
Legislation in the Senate, including the CLARITY Act, could create a clearer regulatory framework, Powers told "National Report."
Crypto remains "inherently somewhat volatile," but the legislation will be "really powerful for our economy," Powers added.
"It's going to allow us to be the leader in the crypto space," he said.
Meanwhile, "what's happening with Bitcoin actually isn't all that complicated," Powers added.
"It's the oldest story in finance," he said. "People are borrowing money, which, if it works out, makes you feel like a genius."
"But when it doesn't work out, it can backfire, right? So they're using leverage."
Powers said volatility can accelerate once prices fall to a level that triggers liquidations across multiple funds at once.
"What people don't realize about crypto is that once prices hit a certain level, you basically get a chain reaction, a mass sell-off," Powers said.
"So it's actually not necessarily that there is a massive sell-off," he added. "It's just once you hit a certain triggering point — like a certain price — all these different funds are liquidating at the same time, causing basically a domino effect."
He cautioned that leverage can "wipe you out" if used carelessly and encouraged novices to learn how it works before risking significant money.
"I'm not going to go so far as to suggest people stay away from that," said Powers. "I would suggest that people learn how to use it."
"There are prediction markets where you can use leverage on things that you might really understand, and might get a sense for the odds."
The segment also referenced commentary from Johns Hopkins University applied economics professor Steve Hanke, who posted "Bitcoin equals fool's gold" while comparing gold prices with Bitcoin.
Powers said the comparison reflects investors' preference for gold during short-term volatility.
"I think what he's saying there is not that Bitcoin is necessarily a bad thing or that it's foolish to put money into Bitcoin," Powers said.
"I think what he's saying is that compared to literal gold, sometimes when there is economic volatility or a high risk, people still do view gold as the safer place to put their money in the interim versus crypto, right? Especially Bitcoin."
Powers added, "Crypto is really valuable long term as people potentially lose faith in the system or avoid it. It's very long-term systemic risks, but for short-term volatility, gold is still the preferred standard."
GET TODAY NEWSMAX :
NEWSMAX is the fastest-growing cable news channel in America with more than 30 million people watching!
Reuters Institute reports NEWSMAX is one of the top news brands in the U.S.
You need to watch NEWSMAX today.
Get it with great shows from Rob Schmitt, Greta Van Susteren, Greg Kelly, Carl Higbie, Rob Finnerty – and many more!
Find the NEWSMAX channel on your cable system – Go Here Now
BEST OFFER:
Sign up for NEWSMAX and get NEWSMAX, our streaming channel NEWSMAX2 and our military channel World at War.
Find hundreds of shows, movies and specials.
Even get Jon Voight's special series and President Trump's comedy programs and much more!
Watch NEWSMAX on your smartphone or home TV app.
Watch NEWSMAX anytime, anywhere!
Start your FREE trial now: NewsmaxPlus.com
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
© 2026 Newsmax. All rights reserved.