According to JP Morgan, the deleveraging phase will not last long. You may be wondering what JP Morgan is. JP Morgan is one of the most repsected financial service firms in the world. JP Morgan serves businesses, corporations, and individuals in over 100 countries.
Some crypto companies have failed, which is not a shock. It is due to the price of many cryptos dropping. Nikolaos Panigirtzoglou, a strategist at JP Morgan, says that the liquidity at the hedge fund Three Arrows Capital “is a manifestation of this deleveraging process.” “The current deleveraging cycle may not be protracted, the fact that crypto entities with the stronger balance sheets are currently stepping in to help contain the contagion, an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June,” the JP Morgan strategist added.
As we all have seen, the crypto market has had a rough few months. Last Thursday, the total crypto market cap was $930 billion. This is after the market was passing the $3 trillion mark in November. In addition, there was a Terra/ Luna ecosystem disaster that took place in May. Lastly, the Three Arrows Capital failed, and withdrawals were on hold from the Celcius Network. These are just some of the many incidents the crypto market has been through recently.
However, the cryptocurrency exchange FTX has been lending money to some businesses and is reportedly considering acquisitions. Venture capital fundraising efforts have persisted, as seen by the $53 million hauls this week from data startup Kaiko.
JP Morgan believes the deleveraging is out of the picture. The JP Morgan strategists said regarding the firms “that deleveraging is already well advanced.”