Bloomberg News reports that the crypto markets are fac weeks of deleveraging as a fallout from the crunch at the digital asset exchange FTX.com. There is a lot of upheaval in the present that could make Bitcoin slide down to $13,000, as per JPMorgan Chase & Co. strategists. Strategists also anticipate that there might be a “cascade of margin calls” if there is an interplay between the exchange and Alameda Research, its sister trading house. The same was revealed in a note by Nikolaos Panigirtzoglou, who is heading a team.
The Current Scenario in the Crypto Sphere
The team also revealed that, at present, the aspect which is making even further difficulties in the new phase of crypto deleveraging is that it is being triggered by the fact that those entities that have a higher and stronger balance sheet can bail out or rescue the ones that have low capital, but this high leveraging is found to be shrinking.
It is being observed that investors are yet to come to terms with the unraveling that has taken place at FTX.com and the issues and concerns associated with Alameda Research, and 30-year-old Sam Bankman Fried established both. Fears are ripe that the bankruptcy of FTX.com might lead to the other crypto outfits drowning or being pulled down by the current crypto market conditions.
Bloomberg News reports that the strategists have attributed the production cost of Bitcoin as a means of calibrating the extent to which it can drop. The cost of production is primarily the electricity required for operating the powerful computers that make the Bitcoin network run.
They also stated that at present, the cost of production would stand at $15,000; however, it might likely revisit the mark of $13,000 low that was observed during the summer months.
Bitcoin was found snapping the four-day drop, including a nearly 16% tumble Wednesday for edging up to approximately $16,200 as of 9:35 am on Thursday in Singapore. The crypto market was steady broadly but on edge regarding what risks might be ahead.
A Money Injection is Needed to Bail Out
Bankman-Fried spoke to the investors of FTX.com and revealed that unless there is a cash injection into the company, it would have to file for bankruptcy, as per an individual familiar with the matter.
This episode has also been impacted by the befalling virtual coins fostering losses in the current year amidst the Fed’s aggressive hike in the interest rate.
The last time such a shakeout was observed was in the case of TerraUSD way back in May, along with the sister Luna that imploded. However, the JPMorgan team of strategists also said that this time, the damage to the crypto market would be smaller than it was in the case of the TerraUSD episode.
