FTX Collapse: Tough Times Ahead Warns JPMorgan Analysts
- Blog
- November 14, 2022
FTX Collapse: Tough Times Ahead Warns JPMorgan Analysts
JPMorgan Chase experts, headed by Nikolas Panigirtzoglou, a global market strategist, released their assessment on Thursday of the FTX fiasco and bitcoin price prediction. The researchers focused on the drop in strong competitors in the crypto market.
The analyst said that the new phase of crypto deleveraging influenced by the collapse of Alameda Research and FTX is more problematic due to the drop in the number of entities with robust balance sheets able to rescue the ones with low capital and high leverage.
FTX CEO Sam Bankman-Fried allegedly reached out to numerous prominent crypto exchanges, like Coinbase and Okx, for assistance as the company went through a liquidity constraint. He reached out to Binance in the end, despite CEO Changpeng Zhao’s (CZ) announcement that Binance would be selling all the FTX tokens (FTT) it owns. Although Binance planned to buy FTX and supply liquidity, it backed out after doing due diligence.
A “cascade of margin calls” is potentially underway, said JPMorgan, considering the relationship between FTX.com, Alameda Research, and the cryptocurrency ecosystem.
The global investment bank warned that the FTX crisis would likely lead to weeks of deleveraging in the cryptocurrency sector, with Bitcoin price dropping below $13,000 consequently.
JPMorgan experts measure the extent to which bitcoin’s price might fall based on its production cost. The current production cost is $15,000, which is expected to decline to the summer’s low of $13,000, as per the firm.
