Share this article
JPMorgan Says Crypto Market Deleveraging Cycle Won’t Be Lengthy
Stronger crypto companies are stepping in to help contain contagion, and venture capital funding is still healthy, the bank said.
By Will Canny
Updated May 9, 2023, 3:49 a.m. Published Jun 30, 2022, 11:36 a.m.
The collapse of crypto hedge fund Three Arrows Capital (3AC) indicates that the ramifications of this year's cryptocurrency market slump continue to reverberate, JPMorgan (JPM) said in a report Wednesday.
While it is hard to assess how much more deleveraging still needs to happen, the bank said, its indicators suggest the process is already well advanced.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
Multiple failures among companies in the industry should not surprise given the backdrop of deleveraging and the 70% drop in digital asset market capitalization since November, the report says.
The entities that employed higher leverage in the past are now the most vulnerable, the bank said. “Whether it is miners having borrowed to expand operations using their bitcoin as collateral, or corporates such as MicroStrategy (MSTR) having borrowed in the past to invest even more heavily into bitcoin, or hedge funds using futures to lever their positions, or retail investors borrowing via margin accounts to invest in various cryptocurrencies.”
The failure of 3AC is a manifestation of this deleveraging process, the note says, adding that the process seems well advanced, “making the bottom formation process in crypto markets more volatile.”
Bitcoin miners are another source of stress for crypto markets, JPMorgan said, given the pressure to sell their tokens to deleverage or to cover the cost of their operations. Selling of bitcoins by miners intensified in June and will likely continue into the third quarter, it said.
The weakest crypto companies, those with high leverage and lower capital levels, are the most challenged. Conversely, those with the healthiest balance sheets are most likely to survive and will emerge stronger once this current phase is over, the report says.
JPMorgan identifies two reasons to suggest that the cycle may not be very protracted: Stronger crypto companies with more robust balance sheets are stepping in to help contain contagion, and the continued healthy pace of venture capital (VC) funding, an important source of capital for the digital assets ecosystem.
Read more: Deutsche Bank: Crypto Free Fall Could Continue Because of the System’s Complexity
More For You
What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
More For You
Turkey's Paribu Buys CoinMENA in $240M Deal, Expanding Into High-Growth Crypto Markets
With the acquisition, Paribu gains regulatory foothold in Bahrain and Dubai and access to the region's fast-growing crypto user base.
What to know:
- Paribu acquires Bahrain- and Dubai-based CoinMENA for up to $240 million.
- Deal marks Turkey’s biggest fintech acquisition and first international crypto M&A, the firm said.
- The move taps into the MENA region’s fast-growing crypto user base and supportive regulatory hubs.
Top Stories
