JPMorgan Unveils Shock ‘Cascade’ Bitcoin Price Prediction After Impressive FTX Meltdown
Bitcoin
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Bitcoin price has crashed below $17,000 per bitcoin, down more than 70% from the high of nearly $71,000 set a year ago, and some fear the crypto price crash could be about to go from bad to worse .
Now, analysts at Wall Street giant JPMorgan have issued a devastating bitcoin price prediction, warning that the cryptocurrency could fall another 25% following the FTX meltdown — even after the bank made a big bet on crypto.
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JPMorgan CEO Jamie Dimon has long been an outspoken critic of bitcoin and crypto, … [+]
“What makes this new phase of crypto debacle induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets capable of bailing out those with low capital and high leverage is shrinking within the crypto ecosystem,” JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note to clients watch out Marketwatch.
The researchers said they expect the latest crypto crisis – which comes after a series of failures this year – could push the bitcoin price to a low of $13,000 due to a “cascade of margin calls” in the wake of the FTX collapse, which points on bitcoin production costs which are currently around $15,000 per bitcoin.
“Given the size and interconnections of both FTX and Alameda Research with other entities in the crypto ecosystem, including DeFi (decentralized finance) platforms, it appears that a new cascade of margin calls, deleveraging and crypto company/platform failures is beginning in the same way that we saw last may/june the collapse of terra” – an algorithmically stable coin that was designed to be linked to the US dollar via its backing coin luna.The terra luna meltdown caused a number of companies to declare bankruptcy.
This week, reports revealed that FTX is staring into a yawning black hole in its balance sheet that could be as large as $10 billion after coming in with user deposits with Alameda’s trading fund. FTX this week filed for bankruptcy, estimating it has between $10 billion and $50 billion in assets and liabilities and more than 100,000 creditors.
According to JPMorgan’s analysis, the FTX crisis “could create a similar wave of deleveraging to that seen after the $20 billion terraUSD collapse in May” and “unless a bailout for Alameda Research and FTX is quickly agreed.”
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Bitcoin price has been in a steep downward trend for the past year.
However, the crypto community does not expect a quick resolution to the FTX-induced price crash.
“It will be weeks before we see the full extent of the damage done,” Anto Paroian, CEO of cryptocurrency hedge fund ARK36, said in an emailed statement.
Despite the widespread price panic, some have pointed to previous market declines as evidence of an eventual recovery.
“The market is taking a hit, but crypto’s volatility has historically led to shakeouts that ultimately strengthen the space in the long run,” Akeel Qureshi, core contributor to the hubble protocol and Kamino Finance on the solana blockchain, said via email.
