Nicholaos Panigirtzoglou, a strategist at JP Morgan, says that after many weeks of free fall, the market may have hit bottom.
The JP Morgan Chase & Co. strategist has noted that The worst part of the market crash may be over, and that we are close to hitting the bottom. Nicholaos Panigirtzoglou predicts that the beginning of the end of deleveraging, a practice that has been the last resort for a number of troubled crypto companies, shows that the market is close to hitting the bottom and starting to recover.
Nikolaos Panigirtzoglou, strategist and managing director at JP Morgan, said: “Indicators such as our net leverage metric suggest that Deleveraging is already well advancedThis could be a sign that the market is beginning to bottom out and may soon begin to recover.
One of the reasons for making this prediction is that many cryptocurrency companies have pledged to fight for contain the market decline, helping the companies and protocols most affected by the fall.
JP Morgan strategist talks about initiatives like that of Nexus, which made an offer to take over Celsius's debt, or that of FTX, which has offered to acquire BlockFi and take over its debt, triggering a $250 million emergency credit line.
Another reason is that, in most cases, the Venture capital funding has not been affected by the current market situationIn fact, despite the state of the market, funding has totaled around $5.000 billion in May and June.
On the other hand, Mark Newton, technical strategist at Fundstrat, noted that: “Bitcoin has had good success over the past dozen years in making cyclical lows every 90 weeks. Lows should be right around the corner according to this cyclical composite, and one should be on alert in the month of July, looking to buy weakness for a healthy bounce, just as sentiment appears to be reaching a bearish inflection point.”
What is deleveraging?
Deleveraging occurs when a company decides reduce their leveraged positions by quickly selling their assets to cover their debts. Several cryptocurrency entities have resorted to reducing their leveraged positions due to the sudden crash of the crypto market.
Firms such as Celsius Network or Three Arrows Capital have been exposed to high leverages that have ended up being counterproductive. For example, Three Arrows Capital defaulted on a $670 million loan due to high leverage.
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