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

Will Canny is CoinDesk's finance reporter.

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.


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

CoinDesk - Unknown

Will Canny is CoinDesk's finance reporter.

CoinDesk - Unknown

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

CoinDesk - Unknown

Will Canny is CoinDesk's finance reporter.