Bitcoin needs regulation ‘to survive and thrive’: InTheMoneyStocks.com president says

InTheMoneyStocks.com President & CFO Gareth Soloway joins Yahoo Finance Live to provide technical analysis on the price of bitcoin as well as the outlook for crypto regulation.

Video transcript

ALEXIS CHRISTOFORUOS: All right, Bitcoin investors getting a bit of whiplash today. The cryptocurrency fell sharply earlier below $35,000. But as you can see here, has since bounced back a bit, rallying now nearly 3%. Not the case, though, for its fellow cryptocurrencies, including Ethereum and Doge. Solana also sharply lower.

We want to bring in Gareth Soloway now, President and CFO of InTheMoneyStocks.com for a closer look inside crypto. Gareth, thanks for being with us. So it looks like Bitcoin has, sort of, broken off from the pack, moving a bit higher today. Any reasoning there, do you think, as to why we saw that dramatic turnaround in Bitcoin this afternoon?

GARETH SOLOWAY: Yeah, absolutely. So on a technical basis, and I'm a chart guy, it's all about how much it was down. It was oversold. And what's fascinating about Bitcoin is that if you go to the April 2021 high to the low in June and July, that distance fall that it had before going to $69,000 is the same distance that it has fallen now.

So it's really remarkable to 26-- $36,000 fall was the fall from April to June and July. And now we have now fallen that same amount to the downside. So you have this almost round trip of Bitcoin in terms of falling where you're going to get a technical support level. In addition, you also if you connect the high from the 2007 bubble high of around $20,000, it connects perfectly through the lows of the earlier portion of June, July of 2021 and right to the current levels right here.

So on a technical basis, it was oversold. The technicals are telling you a bounce. I don't think it's a bottom. I think ultimately, we're in a bear market. But I think you're going to get a bounce back to $40,000 to $45,000 on Bitcoin.

- Now, when do we see that bounce back? And does it continue into the rest of the year in a volatile environment now?

GARETH SOLOWAY: Yeah, so there's no doubt that the connection between the stock market is there. So the tech sector is bouncing as well off of the lows today. You're seeing, kind of, this run into high PE stocks, which then coordinates with Bitcoin in the high risk nature of cryptocurrencies.

So I do think this is a shorter term bounce that's inside of an overall bear market that's starting for assets. So I would guess this bounce lasts for about four to six weeks, and then my guess is you'll start turning down again. And just with the stock market as well, you'll start heading lower.

ALEXIS CHRISTOFORUOS: And when we do start to head lower, Gareth, where do you see the floor for Bitcoin?

GARETH SOLOWAY: Unfortunately, it's looking to be sub $20,000 when all is said and done still. That's a level that I talked about when we were at $69,000 earlier in late in 2021. It's that the deleveraging that the Federal Reserve is now causing is going to translate into a major deleveraging in cryptocurrency prices. And you have to have the dot com washout. There's no doubt about it.

Bitcoin was a new technology with blockchain, and that's the same thing that went on in the late '90s that created the bubble then. It has to deflate. You'll see major players like Bitcoin and Ethereum survive and thrive just like Amazon has. But you got to get that wash out, and it should come later this year.

- And then I want to know who will help it rebound. Is it the institutional investor? And then how much more regulatory clarity do we need to see in this space?

GARETH SOLOWAY: So one of the biggest things for Bitcoin to survive and thrive, I truly believe is regulation. You have to get some of this safety things put in place, FDIC insurance. I mean, there's so many situations where people are getting robbed in their cryptocurrency accounts because they get hacked or they get phished or stuff like that. So you need to see regulation come in. That will give a lot of other investors confidence to go into that space.

You will then also see institutions, pension funds, and bigger players getting in there as well. So I'm a big believer that you have to see that regulation come in to make it safer for investors. And then once you do, you have a perfect situation for digital gold to go much higher than the recent highs of $69,000, $100,000, then $500,000.

ALEXIS CHRISTOFORUOS: All right, you know, this week we're going to probably hear from Elon Musk. He's expected to be on that earnings call for Tesla after the bell on Wednesday. And I'm wondering if anything from Elon Musk can sustain Dogecoin. I mean, he talked again recently about the company perhaps accepting it as payment for its cars. Do we need another announcement like that to help the sector turn around?

GARETH SOLOWAY: Yeah, I mean, there's always that short term pop from Elon Musk, if he does mention it. I'm sure he'll get asked about it. My biggest thing is that when I'm investing in cryptocurrencies, I want to know there's a scarcity aspect. I invest in cryptos because they're not the US dollar that the Fed and the government can just run up and print more of.

And so you don't have that with Dogecoin. Every minute, I believe, there's another 10,000 Dogecoins printed. So it's essentially the same as if you're holding the dollar. So, I mean, yes, it's a digital way to make transactions, but in this day and age we have so much of that already that without something else, I just don't see Dogecoin having sustainable long-term value.

ALEXIS CHRISTOFORUOS: All right, you heard it here. Gareth Soloway, President and CFO of InTheMoneyStocks.com. Thanks so much for your time today.