An analyst at JPMorgan forecasts that the worst of the bear market may be behind us now that stronger crypto businesses have stepped in to save the sector in the middle of massive deleveraging.
In a note published on Wednesday, JPMorgan analyst Nikolaos Panigirtzoglou cited an increase in firms’ readiness to bail out startups and a robust pace of venture capital investing in May and June as the reason for his confidence. He said that essential indications support the evaluation:
Indicators such as our Net Leverage indicator indicate that deleveraging is well underway. Panigirtzoglou noted that the degree of deleveraging among certain crypto enterprises may be so severe that it “suggests that the aftershocks from this year’s crypto market decline continue to resonate.”
However, Panigirtzoglou claims that deleveraging may be coming to an end since crypto organisations are stepping in to save faltering businesses, stating: “Crypto firms with better financial sheets are now stepping in to assist limit the spread.”
Sam Bankman-FTX Fried’s exchange is apparently positioned itself to increase its industry impact in the wake of the failures of many blockchain companies, including Three Arrows Capital and Celsius. Cointelegraph reported on June 30 that rumours are circulating that FTX is proposing $25 million to purchase the BlockFi cryptocurrency lending business.
Panigirtzoglou views the robust rate of venture capital investing in the cryptocurrency industry as a positive indicator. JPMorgan believes that there was around $5 billion in venture capital financing for cryptocurrency companies in May and June. Dove Metrics, a fundraising metrics tracker using Airtable’s data, predicts that crypto financing increased to $8.6 billion within the same time.
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