Analysts at the financial giant note that the world’s largest cryptocurrency may experience an even more significant drop after the bankruptcy of the brokerage company.
After a quiet moment, the cryptocurrency market is facing major shocks due to the bankruptcy of the second largest brokerage company in the sector. FTX took everyone by surprise with data that caused panic among investors and a wave of withdrawals from crypto exchanges. JPMorgan analysts note that due to the shock in the sector, bitcoin could fall even further to $13,000.
According to the financial giant’s report, there could be a “cascade of margin calls” involving FTX and Alameda Research, a company in the group with around 30% of its balance in FTX-issued FTT tokens.
This was the main cause of a wave of looting and mistrust, culminating in the bankruptcy of a group of more than 130 companies and the resignation of its CEO, Sam Bankman-Freed.
Margin requirements arise when investors make certain financial requirements to put in more money and ensure the survival of companies using leveraged funds.
Bitcoin is currently worth $16,798, according to CoinMarketCap. The world’s largest cryptocurrency has fallen by 4.3% in the last 24 hours. However, according to JPMorgan analysts, the fall could be even greater in the coming weeks.
“What makes this new phase of cryptocurrency deleveraging more problematic, brought on by the apparent collapse of Alameda Research and FTX, is that it reduces the number of institutions with stronger balance sheets to bail out those with low capital and high leverage.” , – he said. – said the team led by Nikolaos Panigirtzoglou.
While the FTX Affair seems to have finally come to an end with the bankruptcy of the group of companies, specialists and investors still fear that the ripple effect could cause other companies in the sector to feel the negative consequences of what happened.
According to JPMorgan analysts, this effect could last for several more weeks, which will affect the price of major cryptocurrencies such as Bitcoin.
In this sense, the loss of FTX could be significant for the market, as the company, led by Sam Bankman-Fried, made large donations to companies in the sector in distress. The former CEO has even become known as the “savior of cryptocurrencies.”
JPMorgan analysts note that after FTX’s bankruptcy, few other companies will have the ability to do this for others.
“The number of organizations with stronger balance sheets that can save those with low capital and high leverage is decreasing in the cryptocurrency ecosystem,” they said.
However, according to the report, the positive impact of the event will be the transformation of the cryptocurrency market into a more secure and transparent environment.