There are dangers lurking in the cryptocurrency market that could burn a lot of investors, according to Michael Dudas, a veteran gold analyst.

Dudas, a partner at Vertical Research, refers to the emerging asset class as a "dicey investment" — citing the amount of fast money flowing into the space and the lack of regulation.

"It's a very speculative investment right now," he said Tuesday on CNBC's "Futures Now." "Just in the last few days, the amount of volatility the market has seen has made headlines around the world."

His thoughts came as bitcoin was trying to recapture its latest losses from a wild ride that shows no indication of ending. It fell to as low as $10,400 on Friday. But by Tuesday, it was back in rally mode.

"There's still just a lot of misunderstanding or a lot of education required about the supply of these different cryptocurrencies [and] how it's going to play out over the longer term," he noted.

Yet, Dudas acknowledges that the decision by Cboe and CME to trade bitcoin futures contracts is a sign that cryptocurrencies are here to stay.

"Putting this into the marketplace certainly adds a sense of legitimacy to the bitcoin markets. But again, it's early stages, and markets do go both ways," he said. "The markets and investors might find an opportunity with these exchanges to be a little bit more negative, and be short the coins as opposed to long."

But a lot of work still needs to be done on the regulatory front, contended Dudas. He sees this as a big catalyst for sustainable downside risks.

"If there are some very big volatile issues and the public gets hurt in any sense, I think that could cause a chill to this market without question,"' Dudas said. "The regulation aspect from a government could cause the market to fracture a bit."