By Alicia Maher
The general crypto market has recently rallied above the $1 trillion mark again. But JPMorgan Chase has called the public’s attention to the possibility of a long crypto slide hanging ahead.
Fewer Funds from Investors
The latest view comes in the midst of the fast evaporation of venture capital. Nikolaos Panigirtzoglou, a JPMorgan strategist, spoke to this effect on Thursday. He said funding in the crypto market is currently going at $10 billion per year. Which is just a third of the rate it was last year.
Venture capital funding for the crypto industry dipped to $4.4 billion in the third quarter of this year. General demands for risky assets dropped significantly as a result of several macroeconomic factors. The chief of them is the monetary policy rates.
The JPMorgan team wrote that the development calls for concerns. Venture capital funds are showing reluctance to deploy investment into the space. It has, therefore, increased the possibility of seeing a long period of crypto market weakness.
Coinbase crypto exchange reported its third-quarter earnings on the 3rd of November. The company incurred a net loss worth $545 million. Coinbase said its revenue was heavily affected by macroeconomic situations and crypto correction.
Furthermore, it said it does not expect that the crypto market would recover so quickly. On the same day, COIN’s stocks fell by a further 8% to close sales at $55.8. COIN’s stocks have, thus, fallen by about 85% in the last year.
Banks to Protect Customers
In further developments, JPMorgan admonished banks to lay a huge premium on protecting customers. This becomes necessary as they begin to venture into crypto-related ventures. Banks have been getting closer to the crypto sector recently than ever before.
They envisage that it would make their services more widely relevant and better efficient. But better security is needed to guard investors against the risk of cyberattacks. JPMorgan’s Onyx CEO, Umar Farooq, spoke at the Fintech Festival in Singapore early in the week. He said both from the regulator’s and customers’ perspective, banks have to protect customers.
Banks cannot lose customers’ money, he emphasized. JPMorgan is using a solution called the verifiable collection to make sure it protects customers. The verifiable collection is designed to stay put in the customers’ wallets. And the credentials are verified when a customer trades with the protocol.
Farooq said he doesn’t foresee people sending money anonymously to anonymous destinations. The result will be a money laundering situation sooner or later.