According to JP Morgan’s strategists, the bottom of the crypto market’s weeks-long freefall may be in sight. Since the skyrocketing prices in November of last year, about $2 trillion in market value for cryptocurrencies has vanished.
However, according to Nikolaos Panigirtzoglou of JPMorgan Chase & Co., the deleveraging that caused the panic is far along and may not have much further to go.
Nikolaos expressed his confidence in a note on Wednesday, citing the improved readiness of businesses to save struggling ones and a robust speed of venture capital funding in May and June. Moreover, he claimed, “Indicators like our Net Leverage metric suggest that deleveraging is already well advanced.”
The Terra ecosystem crashed in May, wiping out tens of billions of dollars and starting the deleveraging of key crypto businesses, whereby their assets have been sold either voluntarily, urgently, or via liquidation. Since then, the cryptocurrency lenders BlockFi and Celsius and the investment company Three Arrows Capital have also encountered issues.
Panigirtzoglou added that the severity of certain crypto businesses’ deleveraging could be so severe that they “suggest that the aftershocks from this year’s crypto market fall continue to resonate.”
Dwindling Judgement
Currently, the market is experiencing a tremendous decline in unsustainable company strategies. However, many crypto organizations still need to be discovered. According to FTX CEO Sam Bankman-Fried (SBF), there are still several “third-tier” exchanges that are bankrupt but have not yet come out, hinting that when they do, there may be further volatility.
Many publicly traded industry titans sold more BTC than they created last month in anticipation of an even more significant selloff due to Bitcoin mining becoming less profitable and revenues dramatically dropping. SBF also disclosed that it is closely monitoring the miners.
