A strategist at JPMorgan has projected that the hardest part of the crypto winter for crypto assets, companies, and individual investors is nearing its conclusion. It is anticipated that deleveraging, which has been the final alternative for a lot of failing crypto businesses, has reached its conclusion.
“Indicators like as our Net Leverage indicator indicate that deleveraging is well underway,” said Nikolaos Panigirtzoglou, strategist and Managing Director at JPMorgan. During the weak market, Panigirtzoglou confirmed the increase in deleverage holdings.
He cited the fact that other crypto businesses with “stronger financial sheets” are making it their business to aid in containing the bear market’s contagion as part of the justification for this forecast.
The expert was definitely referring to the engagement of the Bahamian cryptocurrency derivatives exchange FTX in the BlockFi dilemma. The exchange provided BlockFi with a $250 million credit line to assist the company in “navigating the market with confidence.”
The prediction was also impacted by the fact that venture capital investment has not been significantly impacted by the present market conditions. Between May and June, funding totalled over $5 billion despite the Crypto Winter.
Exposition to leverage
When a company chooses to lower its leveraged positions by swiftly selling off assets to satisfy debts, this is known as deleveraging. A lot of crypto organisations have reduced their leveraged holdings as a result of the rapid crypto market meltdown and the decline of Terra’s UST stablecoin.
Recently, Three Arrows Capital, a crypto hedge fund located in Singapore, defaulted on a $670 million loan provided by Voyager Digital. The crypto hedge fund has had a difficult time managing the market owing to the present glut. This has made it susceptible to liquidation.
Numerous firms, including Celsius Network, have been exposed to significant leverages that seem to be backfiring owing to current market conditions. The future path of the cryptocurrency market in the next weeks is unknown, but it will certainly influence how investors and crypto companies fare.
Also Read: CoinLoan Reduces Withdrawal Limits Citing Market Circumstances
Wallets