UPDATE 2-Bitcoin slumps 10% as pullback from record high gathers pace

* Traders cite fears of tighter U.S. regulation
* Growing concern of bitcoin price bubble
* Cryptocurrency is down around 27% since Jan. 8 record

(Adds quote, adds byline, updates prices)
By Julien Ponthus, Tom Wilson and David Randall
LONDON/NEW YORK, Jan 21 (Reuters) - Bitcoin BTC=BTSP
slumped 10% to a 10-day low before paring some of its losses
Thursday as traders feared tighter U.S. regulations.
The world's most popular cryptocurrency Bitcoin was last
down 10.6% at $31,724. It has lost about 27% of its value after
touching a record $42,000 on Jan. 8.
The pullback comes amid growing concerns that bitcoin is one
of a number of financial market price bubbles.
Fears that U.S. President Joe Biden's administration could
attempt to regulate cryptocurrencies have also weighed on
sentiment, traders said.
During a Senate hearing on Tuesday Janet Yellen, Biden's
pick to head the U.S. Treasury, expressed concerns that
cryptocurrencies could be used to finance illegal activities.
"I think many are used, at least in a transactions sense,
mainly for illicit financing, and I think we really need to
examine ways in which we can curtail their use and make sure
that money laundering does not occur through these channels,"
said the former chair of the U.S. Federal Reserve.
Joseph Edwards of cryptocurrency broker Enigma Securities
said these comments had a substantial impact.
"The action over the last 36 hours or so has largely been
rippling outwards from the Janet Yellen comments on crypto," he
said, adding that it was still unclear exactly what, if any,
moves the Biden administration would take.
"We do think it's probably still just a lapse in momentum
rather than a sea change, though," he said.
The declines come amid signs that more institutional
investors are taking steps to invest in the cryptocurrency.
BlackRock Inc, the world's largest asset manager, plans to
add bitcoin futures to the list of eligible investments for two
of its funds, company filings Wednesday show. L4N2JW3RJ
Other asset managers are likely to follow in BlackRock's
footsteps and add exposure to bitcoin in their go-anywhere or
macro strategies as the cryptocurrency market becomes more
developed, said Todd Rosenbluth, director of mutual fund
research at investment research firm CFRA.
"It's easy to see how strong the performance has been of
late and look at a historical asset allocation strategy that
would have included a slice of crypto and how returns would have
been enhanced as a result," he said. "Large institutional
investors are going to be able to tap into the futures market in
a way that a retail investor could not do."
There are currently no U.S.-based exchange traded funds that
directly offer exposure to bitcoin.