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July 4, 2022

JPMorgan Strategist: Crypto Bear Market Almost Over

The worst of the crypto winter, according to a JPMorgan analyst, is about to end for crypto assets, companies, and individual investors. As a last option for many failed crypto companies, deleveraging is projected to be nearing its end.

“Indicators like our Net Leverage indicator show that deleveraging is already well progressed,” said Nikolaos Panigirtzoglou, JPMorgan’s strategist and Managing Director. Deleverage holdings have risen significantly during the weak market, according to Panigirtzoglou.

Other crypto enterprises with “stronger balance sheets” are making it their business to help restrict the virus spread by the bear market, according to him, which accounts for part of the reason for this forecast. He added.

The analyst was clearly referring to FTX’s assistance in the BlockFi situation, a Bahamian bitcoin futures market. To assist BlockFi in “managing the market from a position of strength,” the exchange provided a $250 million emergency credit line.

As a second factor, venture capital financing has not been significantly impacted by the present market conditions, which also influenced the prediction, In spite of the recent Crypto Winter, financing has topped $5 billion in the months of May and June.

By swiftly selling off its assets, a company is able to lower its leveraged positions and pay off its obligations. After Terra’s UST stablecoin plunged, several crypto companies have reduced their leveraged bets in response.

As of recently, a $670 million loan from Voyager Digital was unpaid by Three Arrows Capital, a Singapore-based crypto hedge fund. Due to the present overpowering circumstances, it has been difficult for the crypto hedge fund to navigate the market. This has made it vulnerable to bankruptcy.

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According to current market conditions, firms like Celsius Network are among those with exposures to significant leverages that seem to be backfiring.

In the next weeks, the crypto market’s future trajectory is uncertain, but it is expected to have a significant impact on investors and crypto businesses.