10 November | Technology | CEOs

JPMorgan announces that cryptomarkets face a “cascade” of margin requirements

A team of analysts at JPMorgan Chase & Co. led by Nikolaos Panigirtzoglou noted that at the moment, cryptocurrency markets face a significant deleveraging due to the recent crisis at the digital asset exchange FTX.com. The period of instability has a negative impact on cryptocurrencies, including Bitcoin, the price of which might fall down to $13,000.

The analysts also outlined the possible occurrence of a “cascade of margin calls” caused by a specific interaction between the exchange FTX.com, trading company Alameda Research, and other members of the crypto ecosystem.

Investors are still concerned about a sudden collapse of FTX.com, the consequences of which put Alameda Research and other crypto companies in danger. The founder and CEO of both platforms — FTX and Alameda Research — is 30-year-old American entrepreneur Sam Bankman-Fried.

The JPMorgan analysts highlighted a specific way to calculate the potential fall of Bitcoin, which is related to the cost of the cryptocurrency mining. In general, it includes energy expenses needed for maintaining the mining equipment.

At the moment, mining costs are around $15,000, but the possibility of its fall to the low of $13,000 recorded in summer cannot be ruled out.

Earlier this week, Bitcoin had already experienced a string of declines, decreasing by almost 16% on Wednesday. However, it managed to grow by 3% to the level of $16,200 on Thursday morning.

According to the Bankman-Fried’s announcement to FTX’s investors, the crypto exchange won’t be able to handle the situation without additional financial support and might be forced to declare bankruptcy.

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