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

Marina Bay Sands Singapore

October 7, 2026

DAS Asia is a a single-day summit at Marina Bay Sands Singapore featuring conversations between the builders, investors, and global leaders are shaping the trajectory of the digital asset ecosystem in Asia & North America.

Hilton Park Lane, London

November 10-11, 2026

DAS London is a two-day summit at the Hilton Park Lane in London featuring conversations between the builders, allocators, and policy makers who are shaping the trajectory of the digital asset ecosystem in the UK, Europe, and North America.

recent research

Onchain Gacha Cover Image.png

Research

Onchain gacha platforms sold $284.3 million of digital card packs in July 2026, and Collector Crypt accounted for more than half of that activity. However, it buys back 92.9% of what it sells, which leaves it with a third of the category's revenue on more than half of its volume, and a quarter of its activity arrives through partner apps whose users it does not own. Courtyard runs the opposite model, a consumer app selling smaller packs to thousands of retail buyers who resell the cards to each other, and it took 59.7% of category revenue while growing through a month the category spent contracting. This report compares the five largest platforms on gross activity, buyback intensity, revenue after buybacks, consumer composition, marketplace liquidity, and distribution ownership, and finds Courtyard the strongest performer as of July 2026, with the qualification that none of the five discloses inventory costs or resale proceeds, so no platform in the category can yet be shown to be profitable.

Newsletter

The Breakdown

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

Blockworks Research

Unlock crypto's most powerful research platform.

Our research packs a punch and gives you actionable takeaways for each topic.

SubscribeGet in touch

Blockworks Inc.

133 W 19th St., New York, NY 10011

Blockworks Network

PodcastsNewslettersEventsRoundtablesAnalytics