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Amid the drama surrounding the busted agreement Between FTX and Binance, banking giant JP Morgan has commented on the current state of Bitcoin and the broader crypto market. If FTX files for bankruptcy, the contagion could be huge.
As a Bitcoinist reported Today, in a conversation with his investors, FTX CEO Sam Bankman-Fried, shortly before Binance turned down its bailout, confirmed that the balance sheet hole is $8 billion.
An anonymous source leaked that the troubled exchange is seeking bailout funding in the form of debt, equity or a combination of both. With Singaporean state-owned company Temasak and TRON founder Justin Sun, there are at least two small glimmers of hope right now.
JP Morgan predicts bleak times for Bitcoin
FTX’s impending bankruptcy continues to weigh heavily on the Bitcoin price at this point. At the time of writing, Bitcoin was trading at $17,767, down 9% in the past 24 hours and down 19% in the past seven days.
Exactly one year ago, on November 10, 2021, BTC hit its previous all-time high of $69,045.00, which represents a price drop of about 75% at the current rate.
However, according to the latest report from JP Morgan, it could go even lower as the market faces a “cascade of margin calls.” According to the strategists at JPMorgan led by Nikolaos Panigirtzoglou, the price of Bitcoin could fall as low as $13,000.
In addition, the analysts in the report warn that the cascade effect could be amplified by current market conditions:
What makes this new phase of crypto deleveraging triggered by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets that can rescue those with low capital and high leverage is shrinking in the crypto sphere. .
According to JP Morgan, a recapitulation of miners is a major risk factor. In particular, the US banking giant believes Bitcoin could fall below its cost of production, which currently averages around $15,000.
Right now, this production cost stands at $15,000, but it will likely revisit the $13,000 low during the summer months.
As a result, more miners like Nuclear Scientific may recently be forced to sell their Bitcoin holdings, putting additional selling pressure on the market.
Riot Blockchain, one of the largest publicly traded Bitcoin miners, recently released its latest quarterly report, revealing the state of its finances and operations.
As Jaran Mellerud of Hashrate Index discussed, nothing is more important in a bear market than a healthy balance sheet. Riot has a solid balance sheet with minimal debt, which is reflected in their low debt/equity ratio. The majority of Bitcoin miners listed in the top 10 have comparable good or even better numbers.
Nothing is more important in a bear market than having a healthy balance sheet.
Riot has a solid balance sheet with minimal debt. pic.twitter.com/viWEVUErbP
— Jaran Mellerud (@JMellerud) Nov 9, 2022
However, with Hive, Spere 3D, DMG and CryptoStar, there are also four miners with higher debt-to-equity ratios.