JPMorgan Says Crypto’s Deleveraging Cycle Won’t Last Much Longer

The current phase of deleveraging in cryptocurrencies is at an advanced state and may not last much longer, according to JPMorgan Chase & Co.

Multiple crypto company failures shouldn’t be surprising given huge price declines among tokens, and entities that used higher leverage in the past are the most vulnerable, strategists including Nikolaos Panigirtzoglou wrote in a note Wednesday. The liquidity crunch at hedge fund Three Arrows Capital “is a manifestation of this deleveraging process,” they said.

“The current deleveraging cycle may not be very protracted,” the strategists said, given “the fact that crypto entities with the stronger balance sheets ...