JPMorgan Sees Wave of Crypto Deleveraging From FTX’s Woes

JPMorgan strategists said bitcoin's production cost could be an indicator of the market bottom.

AccessTimeIconNov 10, 2022 at 3:47 p.m. UTC
Updated May 9, 2023 at 4:02 a.m. UTC

The crypto deleveraging sparked by the apparent collapse of crypto exchange FTX and its sister company Alameda Research will be “more problematic” than earlier ones because there’s a lack of strong entities and balance sheets that could come to rescue, JPMorgan strategists led by Nikolaos Panigirtzoglou said in a note to clients Wednesday.

“Given the size and interlinkages of both FTX and Alameda Research with other entities of the crypto ecosystem including DeFi platforms it looks likely that a new cascade of margin calls, deleveraging and crypto company/platform failures is starting similar to what we saw last May/June following the collapse of Terra,” JPMorgan’s strategists said in their note to clients. DeFi, or decentralized finance, is an umbrella term for a variety of financial applications carried out on blockchains.

JPMorgan said investors can potentially look for a bottom in bitcoin (BTC) pricing through its production cost, which has sometimes acted as a floor. The current production cost is about $15,000, though it's likely to revisit the $13,000 it hit in recent months, implying a decline of around 25% from here, the bank noted.

On the optimistic front, JPMorgan said the hit to crypto’s overall market cap may be less than after Terra as deleveraging has been occurring.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Author placeholder image

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

Author placeholder image

Will Canny is CoinDesk's finance reporter.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.