By
Chimamanda U. Martha
April 25th, 2024
JPMorgan believes that the worst of the crypto market is over and expects Bitcoin to show potential upside along with the S&P 500.
After the brutal market crash, Wall Street banking giant JPMorgan has come to feed some hope for the dejected crypto investors. In a note to clients on Wednesday, June 30, JPMorgan strategists led by Nikolaos Panigirtzoglou said that the crypto market is currently in the advanced stage of deleveraging which may not last long.
The analysts also added that considering massive price declines, JPMorgan said that multiple crypto-company failures aren’t surprising. They also added that entities with higher leverage are the most vulnerable. JPMorgan further addresses the liquidity crunch at Three Arrows Capital as a manifestation of this deleveraging process”. The strategists wrote:
“The current deleveraging cycle may not be very protracted,” given “the fact that crypto entities with the stronger balance sheets are currently stepping in to help contain contagion” and that venture-capital funding, “an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”
The crypto market has been undergoing a phase of intense market corrections. The deleveraging process basically refers to the point where crypto firms had to sell their assets in rush, via liquidation, or willingly. The collapse of the Terra ecosystem in May was a major inflection point for deleveraging. The Terra collapse wiped out $40 billion worth of investors’ money in a week’s time.
Following it, crypto lenders and staking platforms like Celcius Networks and BlockFi came into a severe liquidity crisis. The market also witnessed the insolvency of one of the largest crypto-hedge funds Three Arrows Capital.
Back in May 2022, when Bitcoin was trading at $29,000, JPMorgan said that its fair value was $38,000. However, BTC corrected more than 20% from May levels till now.
Deutsche Bank: Bitcoin Can Touch $28,000 by Year-End
JPMorgan is not the only banking giant to believe that the worst day of crypto could be behind us. Earlier today, Deutsche Bank announced that Bitcoin holds the possibility of having a 40% upside from the current levels.
The Germany-based bank believes that the Bitcoin price can touch $28,000 by the end of the year. The analysts at Deutsche Bank compare cryptos to the top U.S. equity benchmarks like Nasdaq 100 and the S&P 500.
The Deutsche Bank analysts – Marion Laboure and Galina Pozdnyakova – believe that the S&P 500 will recover to January levels by the year-end. Thus, Bitcoin could follow them leading to an upsurge in the price.
However, there are market analysts who believe that the US equity market hasn’t yet formed the bottom. Thus, if the S&P 500 corrects further from here, BTC can see further corrections as well!