Giles Keating: Bitcoin Could 'Begin' Finding a Bottom

Bitcoin Suisse Director Giles Keating said Monday he believed cryptocurrency was closing in on a position where it could find a “bottom.”

“Look, obviously, we’ve had some difficult times in crypto markets that are still going on,” Keating said in an interview with CNBC’s Squawk Box Europe host Steve Sedgwick. “But the core systems are working well. The blockchains are functioning. It’s the company that’ve been doing DeFi lending — obviously, the problems with the stablecoin Terra. But the core — bitcoin, Ethereum, the core blockchains are functioning well.”

Sedgwick noted the weekend dip, which saw bitcoin fall below $18,000. “It was quite frightening stuff,” Sedgwick said. “Is bitcoin going to carry on going down as we get, as you say, the … exchange conundrums and oscillation out of the way?”

“The feeling in my eyes is that we are close to a point where the real excess leverage has now been driven out of the system, and a bottom can begin to be formed,” Keating replied. However, he acknowledged “some people are warning that we’re still not yet there, and that if we were to break significantly lower, that we’d see another wave of liquidations.

“There’s always that risk hovering there,” he added. “But my feeling, given — I think those very, very big, double-digit rebounds we saw in bitcoin and particularly in Ether, I think to my mind that was a sign that a lot of those really big liquidations are now done, and that the base really is being formed.”

Leveraged bets on bitcoin have not diminished significantly over the last month. Open interest — which includes both long and short positions — peaked at $8 billion for the month, and as of Monday, stood at $6 billion.

However, companies that were vulnerable to destabilization as a result of bitcoin’s volatility have been exposed over the last several weeks, beginning with Do Kwon’s Terraform. Bitcoin collapsed from a price above $30,000 to less than $27,000 at the beginning of May, due largely to Terraform’s stablecoin, UST, de-pegging from the U.S. dollar. Terraform dumped bitcoin on the market worth billions in USD during a futile effort to defend the peg.

Bitcoin’s collapse to $20,000 at the end of the month similarly led the Celsius Network to announce that it was seizing customer funds, calling it “necessary” for “our entire community.” Cryptocurrency prices are widely expected to collapse to if the company is unable to defend $420 million in collateral that it posted for a loan on the Maker Protocol, which is facing a margin call if bitcoin falls below $15,000.

Meanwhile, BlockFi CEO Zac Prince disclosed on Thursday that his company had liquidated an outstanding loan held by Three Arrows Capital (3AC). The latter firm is facing bankruptcy after unsuccessfully betting that cryptocurrency prices would rise, while BlockFi’s relationship with it has fueled anxiety among investors, who have been racing to withdraw their funds. Prince announced on Tuesday that BlockFi had secured a revolving credit line worth $250 from crypto exchange FTX — potentially to aid in financing the withdrawals.

You can watch Keating’s comments above via YouTube.