Banking behemoth JPMorgan highlighted the possibility of a longer crypto slump ahead.
JPMorgan strategists noted that monetary tightening and other macroeconomic variables have reduced demand for riskier assets significantly.
Trillion level, banking behemoth JPMorgan has warned of a prolonged crypto downturn ahead.
The recent views reflect the dwindling supply of venture capital in the crypto field. On Thursday (Nov 3), JPMorgan Chase & Co. strategist Nikolaos Panigirtzoglou announced that crypto funding is growing at a rate of $10 billion per year. This is one-third of the rate seen last year.
VC funding in cryptocurrency reached a low of $4.4 billion. Demand for risky assets has fallen significantly as a result of monetary tightening and other macroeconomic variables. JPMorgan's team wrote:
This is a troubling trend because it demonstrates VC funds' unwillingness to deploy capital into the digital-asset market, increasing the possibility that the current slump in crypto markets will endure.
On November 3, Coinbase reported its third-quarter earnings with a net loss of $545 million. The company stated that macroeconomic headwinds as well as the crypto market correction have had a significant impact on their transaction revenue.
Coinbase also noted that it does not expect the cryptocurrency market to quickly recover from its present levels
JPMorgan On Consumer Protection
In another development, JPMorgan stated that while banks conduct crypto-related research, they must prioritise consumer protection. Banks have recently moved closer to the crypto industry in order to make their financial services more accessible and efficient.
However, effective security measures are required to protect investors from cybersecurity threats. Umar Farooq, CEO of JPMorgan's blockchain unit Onyx, stated earlier this week at the Singapore Fintech Festival 2022:
“What a bank needs to do, both from a regulatory and customer standpoint, is to protect its customers. We cannot afford to lose their money.”
To work on this, the banking giant is employing a solution known as verified collections, which will remain in the customer's blockchain wallet. When a consumer trades using the protocol, their credentials are confirmed.
What do you think about the JP Morgan’s warning regarding a prolonged crypto bear market? Comment your thoughts below in the comment section.
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