Selloff In Crypto Soon? JP Morgan Hints At Market Turnaround

Following repeated setbacks to the crypto community, the market sentiment appears to be probably at its weakest this year so far. The meltdown of Terra network in May dealt a massive blow to investor sentiment which resulted in widespread crypto selloff.

3AC Liquidation Made It Worse For Crypto

The dip in confidence resulted in massive selloff in cryptocurrencies both among the retail investors and the miner community. With the recent liquidation of Three Arrows Capital (3AC), the situation had only worsened.

Meanwhile, Nikolaos Panigirtzoglou from JP Morgan stated that 3AC’s fall indicates a continuing market fall this year. However, the deleveraging in the crypto space, which peaked recently, could near its end, he was stated as saying by Insider.

“The default of Three Arrows Capital suggests that the tremors from this year’s crypto market fall continue to reverberate. The deleveraging that has overtaken the crypto sector in recent months could be nearing its end.”

Crypto Selloff To End Soon?

Panigirtzoglou said some indicators suggest that deleveraging is already well advanced in the crypto space. Indicators like our net leverage metric show results in this direction, he said.

That crypto entities with the stronger balance sheets are currently stepping in to help contain contagion is helping the community, it is said. This was hinted at Sam Bankman-Fried’s lending to BlockFi. Last month, BlockFi signed a deal with FTX for a $250 million revolving credit facility.

Also, venture capital, an important source of capital for crypto, continues to flow into the industry. Capital flow continued at a healthy pace of about $5 billion in both May and June, the JP Morgan analyst said.

In the space of just three months, Bitcoin price dropped by as much as 58%, based on current price. From trading at around $46,600 early in May to dropping to a low of $17,774, Bitcoin caused havoc for traders. As of writing, Bitcoin is trading at $19,454, down 2.62% in the last 24 hours, according to price tracking website CoinMarketCap.

Anvesh reports major developments around crypto adoption and price analysis. Having been associated with the industry since 2016, Anvesh is a strong advocate of decentralized technologies. Follow Anvesh on Twitter at @AnveshReddyBTC and reach him out at [email protected]

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.