Amid the broken deal 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 transition could be massive.
as a bitcoinist informed of Today, FTX CEO Sam Bankman-Fried confirmed in a call with his investors that Binance had rejected its bailout saying the hole in the balance sheet is $8 billion.
An unnamed source leaked that the troubled exchange is seeking bailout funding in the form of debt, equity or a combination of both. With Singapore-owned Temask and TRON founder Justin Sun, there are currently at least two small sparks of hope.
JP Morgan predicts gloomy times for bitcoin
The impending bankruptcy of FTX is taking a toll on the price of bitcoin at the moment. At press time, bitcoin was trading at $17,767, down 9% over the past 24 hours and 19% down over the past seven days.
Exactly a year ago, on November 10, 2021, BTC reached its previous all-time high of $69,045.00, representing a drop of nearly 75% at the current rate.
However, as per the latest report good From JPMorgan, it could go even lower as the market faces a “cascade of margin calls”. According to JP Morgan strategists led by Nikolaos Panigirtzoglu, the price of bitcoin could drop to as low as $13,000.
In addition, analysts warned in the report that the cascade effect could be amplified by current market conditions:
What makes this new phase of crypto deleveraging more problematic, prompted by the apparent collapse of Alameda Research and FTX, is that the crypto sector is dwindling in the number of entities with strong balance sheets capable of protecting those with low capital and high leverage.
According to JPMorgan, renewed miner dedication considers a major risk factor. Notably, the US banking giant believes that bitcoin could fall below its cost of production, which currently averages $15,000.
At the moment, this production cost is $15,000, but is likely to revisit the lows of $13,000 seen in the summer months.
As a result, more miners such as Core Scientific recently may 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 Melrud of Hasht 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-to-equity ratio. Most of the top 10 listed bitcoin miners claim the same good or better numbers.
Nothing is more important in a bear market than having a healthy balance sheet.
Riot has a solid balance sheet with minimal amounts of debt. pic.twitter.com/viWEVUErbP
— Jaron Melrud (@JMellerud) November 9, 2022
However, along with Hive, Spire 3D, DMG and Cryptostar, there are also four miners that have high debt-to-equity ratios.