JPMorgan Strategists Warn of Extended Crypto Market Slump Ahead

• JPMorgan strategists have warned that the fall in the crypto market is not ending soon.
• They claimed that venture capital funding is now less than a third of the pace in 2021.
• Tough policies have affected liquidity leading to a fall in the demand for riskier assets.

As economic difficulty persists globally, a retrenchment in venture capital funding for the crypto industry indicates that the fall in the crypto market is not going to end any time soon, according to the JPMorgan team.

Reports reveal that JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou claimed that currently, venture capital funding is nearly about $10 billion a year,  which is comparatively less than a third of the pace in 2021.

The JPMorgan team noted:

This is a concerning development as it shows reluctance by VC funds to deploy capital into the digital-asset space, increasing the likelihood that the current weakness in crypto markets would be long lasting.

The team also emphasized the fact that venture capital funding into the industry has gone more than a ‘one-year low of $4.4 billion’ in Q3 of 2022.

One of the reasons the crypto industry has been bleeding red is due to tough policies that have in turn affected liquidity. This ultimately has dipped the demand for riskier assets.

Strategists also noted that declining venture funding in July and August wasn’t completely seasonal as many believed, since it weakened funding in September and October too.

An index of leading crypto assets collapsed 57% in 2022. And if this wasn’t enough, U.S. Federal Reserve’s recent interest rate hikes have turned Bitcoin (BTC), Cardano (ADA), Ripple’s XRP, and Shiba Inu (SHIB) volatile again.

JPMorgan strategists further concluded that after a bear market, the rally in stocks is plunging too and a US Treasury yield curve inversion is at levels never witnessed since the early 1980s. Thus, indicating a recession in the coming time.