Bitcoin Could Plunge To $13k Amid Deterioration In Demand, Silvergate Collapse: JPMorgan

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JPMorgan Chase & Co. is a multinational financial services corporation based in the United States. It is the largest bank in the United States and the largest bank in the world in terms of market capitalization. Even though the bank placed a significant wager on cryptocurrencies, analysts at JPMorgan warned that the price of bitcoin might drop by another 25% in the aftermath of the FTX disaster. 

Despite better indicators for inflation and the global economy, financial services firm JP Morgan forecasts that the United States will face a recession later this year. According to the report, the recession will most likely begin in the second half of 2023.

The company seems to be sticking to its predictions. Read on!

Analysis of the JP Morgan report 

In a recent tweet thread, American journalist Carl Quintanilla reported that JPMorgan had remarked on the recent collapse of $SI, calling it yet “another setback for the crypto ecosystem.” 

JPMorgan claims that it would be challenging to replace the immediate network for handling dollar deposits and withdrawals. Further, it pointed out the reverse in the futures spread, which it saw as a sign of a decline in demand.

Along with taking a dim view of digital assets, the bank also said that before changing its mind, it would need to see progress in two crucial areas: the expansion of stablecoins and the rate of venture capital investment in the cryptocurrency market. The bank has a negative outlook on the market for digital assets, which suggests that the road to recovery may be difficult and drawn out.

The $SI has nevertheless provoked heated discussion and debate among the cryptocurrency community, with some individuals voicing doubts about the long-term viability of digital assets while others continue to be upbeat about its potential for advancement. 

The Silvergate fiasco

Silvergate Bank, a crypto industry MVP, has announced its closure and refund of deposits. The bank cited recent developments in the sector and in regulations as justification for its decision to close. 

A pillar of the cryptocurrency industry, Silvergate Bank, has announced its closure and return of deposits. The bank cited recent developments in the sector and in regulations as justification for its decision to close. After the collapse of the bank triggered a crisis of trust in the sector, shares of companies involved in the cryptocurrency industry dropped on Thursday. Shares of Silvergate plunged 26%, while competitors Signature Bank and erstwhile Silvergate partners Coinbase Global Inc. both had declines of 8%.

The current price of bitcoin is at $19,838 with a market capitalization at $383,139,446,276.

As a result of the revelation that cryptocurrency-friendly bank Silvergate Capital (SI) was winding down, cryptocurrency investors lost around $307 million. Events like this raise the possibility that JP Morgan’s predictions of a recession this year will be actually realized.