Morgan Stanley analysts say the bankruptcies that deepened the bear market are hurting the cryptocurrency industry, but improvements will be the key to salvation.
Analysts predict that winter will continue for a while
Morgan Stanley said in a research report released Wednesday that investor interest has shifted as crypto prices plummet. While individual interest in cryptocurrencies is declining, traditional financial customers are showing more interest in regulated products. According to the report, “the market is reassessing the value of all published projects” following the bankruptcy of FTX and Alameda Research. In addition, investors are now hesitant when using leverage. Discussions at the bank’s second annual “Cryptocurrency vs. Traditional Finance” event on Nov. 28 show the prospect of more bankruptcies and de-leverage in the industry.
When will the crypto winter end?
While it was unclear how long this process would take, most participants were of the opinion that “crypto, Blockchain and ledger technology will be further developed in the future and will be used more and more in the trading of financial assets.” Some investors are of the opinion that it may be a 10-15-year journey before cryptocurrencies become fully mainstream. In this process, his focus is still on building a cryptocurrency infrastructure. Morgan Stanley analysts note that a year has passed since the start of what is known as the crypto winter.
Bitcoin’s price movements currently show that the current cycle is similar to that seen in 2017-18. On both occasions, its price dropped more than 70% from its peak. It experienced a similar decline at this point in the period following the low volatility period. However, leveraged trades were more in this cycle than the previous one. This is probably because institutions such as market makers, companies and investors are dominant this time around. However, in 2017-18, the market was dominated by individual investors. Morgan Stanley expects de-leverification to continue, noting that the stablecoin market value dropped last month, especially for the largest stablecoin Tether (USDT). He states that Alameda Research is the largest single tether buyer.
JPMorgan pushes for cryptocurrency regulations after FTX
Another investment giant, JPMorgan, said bankruptcies will accelerate after the FTX collapse. The company stated in its research report that it will take 18 months for the MiCA bill to go into effect. However, he said that until this date, the effects of FTX’s collapse will continue. cryptocoin.comAs you follow, FTX filed for bankruptcy in November. JPMorgan notes that US regulatory initiatives are garnering more attention because of Terra. The collapse of crypto exchange FTX this month will likely also lead to a greater sense of urgency.
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