Crypto Deleveraging Cycle ‘Won’t Last Much Longer’

JPMorgan says metrics based on futures suggest the current cycle is already well advanced

article-image

Blockworks exclusive art by axel rangel

share
  • Crypto entities with strong balance sheets are stepping in to contain contagion, strategists say
  • The bank points to continued strong VC investment as a sign the shakeout will be short lived

Banking giant JPMorgan expects the current debt-related mayhem in the digital asset markets to come to an end soon. 

“Crypto entities with the stronger balance sheets are currently stepping in to help contain contagion,” a report by the firm’s strategists said. Funding from venture capitalists has also endured the turmoil and continued at a healthy pace in May and June, according to the report.

Entities that had higher leverage were ultimately the most vulnerable in the bear market, the strategists wrote. This included bitcoin miners who had “borrowed to expand operations using their bitcoin as collateral,” hedge funds that used “futures to lever their positions,” and retail investors who borrowed “via margin accounts to invest into various cryptocurrencies.”

Among the deep-pocketed crypto firms stepping in to stem the damage is cryptocurrency exchange FTX, which is pulling together a deal to buy beleaguered digital assets lender BlockFi, according to reports in Blockworks and other publications.

Venture capital firms also seem to be pressing ahead with crypto investments. ​​Andreessen Horowitz broke records last month when it raised a $4.5 billion fund dedicated to crypto, and OP Crypto has reportedly just raised $100 million for early-stage crypto investments. 

Although it is difficult to assess how much more deleveraging needs to still happen, strategists from JPMorgan said, “indicators like our Net Leverage metric based on CME futures suggest that this deleveraging is already well advanced.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

Bain Capital Crypto and Haun Ventures co-led the round as demand grows for Bitcoin-denominated savings and annuities

by Blockworks /
article-image

NYSE owner’s investment values the prediction market at $8–9 billion, signaling Wall Street’s entry into event-based trading

by Blockworks /
article-image

Pineapple begins deploying its $100 million Injective Digital Asset Treasury, staking INJ to earn yield and fund onchain mortgage ambitions

by Blockworks /
article-image

Staking levels in the ether funds will depend on protocol unstaking queue times and anticipated redemption activity, firm says

article-image

ETF inflows, miner strength, and tightening supply drive Bitcoin past its prior peak amid renewed demand for scarce assets

by Blockworks /
article-image

The Guidestar team, led by Alex Nezlobin, will join Uniswap Labs to enhance automated market maker design and smart order routing

by Blockworks /