Kevin Helms
A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.
JPMorgan Expects Crypto Market to Face Weeks of Deleveraging – Warns Bitcoin Price Could Fall to $13,000 – Markets & Prices Bitcoin News
Global investment bank JPMorgan has warned that the crypto market faces weeks of deleveraging following the crisis at Sam Bankman-Fried’s crypto exchange FTX.com and trading platform Alameda Research. The firm’s analysts also predicted that the price of bitcoin could fall to $13,000.
JPMorgan on FTX and Bitcoin’s price
JPMorgan Chase’s analysts, led by global market strategist Nikolaos Panigirtzoglou, provided their analysis of the FTX situation and a price prediction for bitcoin in a note on Thursday.
Explaining that fewer players in the crypto space are now able to bail out weaker players, the analysts say:
What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets capable of rescuing those with low capital and high leverage is shrinking.
Faced with a liquidity crunch, FTX CEO Sam Bankman-Fried reportedly asked several major crypto exchanges, including Coinbase and Okx, for help. When they rejected him, he turned to Binance despite CEO Changpeng Zhao (CZ) saying his exchange is dumping all FTX tokens (FTT) on its books. Binance initially said it would buy FTX and provide liquidity, but after due diligence, the exchange walked away from the deal.
Crypto investors are concerned about the solvency of FTX.com and trading house Alameda Research. Bankman-Fried, who founded both firms, reportedly told FTX.com investors that his company needed a cash injection to avoid having to file for bankruptcy.
JPMorgan warned that a “cascade of margin calls” is likely underway given the interaction between FTX.com, Alameda Research and the rest of the crypto ecosystem.
The global investment bank warned that the crypto market could face weeks of deleveraging as a result of the crisis at FTX, noting that a period of upheaval could drive the price of BTC down to $13K.
JPMorgan’s analysts use bitcoin’s production costs as a way to calibrate how much further the price of BTC can fall. They detailed:
Currently, this production cost stands at $15,000, but it is likely to return to the low $13,000 seen over the summer months.
At the time of writing, BTC is trading at $17,602, up 11% in the last 24 hours, but down 13% in the last seven days.
What do you think of the warnings and predictions from JPMorgan analysts? Let us know in the comments section below.
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