Bitcoin has held up relatively well this week despite negative headlines about regulatory crackdowns.
For analysts with a long-term view, that price action fits with their thesis that increased scrutiny will shake out the bad actors and make the markets healthy enough for institutions to invest.
"In the long run this is WILDLY bullish," Brian Kelly, a CNBC contributor and head of BKCM, said in a note to clients Thursday. "If the DoJ and CFTC feel as though they have 'cleaned' up the market, then it paves the way for a U.S. Physically backed Bitcoin ETF, and brings in institutional investors."
Bitcoin briefly hit a six-week low of $7,272 on Thursday morning after Bloomberg reported the U.S. Department of Justice opened a criminal probe into whether traders are manipulating the price of cryptocurrencies. The report, citing sources, said the Commodity Futures Trading Commission was assisting in the investigation.
However, bitcoin soon recovered its losses for the day and was trading near $7,570 in the afternoon, down just 8 percent since Friday. The CFTC, which oversees bitcoin futures, declined to comment, as did the Justice Department.
"I have not seen any evidence of price manipulation in bitcoin markets, but am certainly in favor of increased oversight, as it can only help to instill further confidence in the crypto markets," said Joe DiPasquale, founder and CEO of BitBull Capital, a cryptofund that invests in other cryptofunds.