JPMorgan believes Bitcoin will plunge to 13,000 and cause an unprecedented crisis in crypto-currencies

According to analysts at JPMorgan Chase & Co, the crypto-currency markets will face weeks of deleveraging in the wake of digital asset exchange FTX.com’s crisis, a period of turmoil that could send bitcoin plunging to $13,000.

A “cascade of margin calls“is likely underway given the interaction between the exchange, its sister trading house Alameda Research and the rest of the crypto ecosystem,” wrote a team led by Nikolaos Panigirtzoglou in a note.

“What makes this new phase of crypto deleveraging induced by the apparent collapse of Alameda Research and FTX more problematic is that the number of entities with stronger balance sheets capable of rescuing those with low capital and high leverage is shrinking” in the crypto sphere, the team said Wednesday.

Digital asset investors are still coming to terms with the rapid collapse of FTX.com and the concerns surrounding Alameda Research, both founded by 30-year-old Sam Bankman-Fried. Some fear that FTX.com’s potential bankruptcy could cause a contagion that would bring down other crypto-currency companies.

Analysts have pointed to bitcoin’s production cost as a way to calibrate its continued fall. The production cost is primarily the electricity needed to run the powerful computers that run the Bitcoin network.

“At the moment, this production cost is $15,000, but it is likely to fall back to the $13,000 low seen during the summer months,” they said.

Other analysts also see the $13,000 level as a possible floor. David Adams, portfolio manager of the King River Digital Assets Fund, said that’s the price he’s calling for, alongside a further decline in so-called alternative tokens. He added that “we will start to see value” at such levels.

Hayden Hughes, chief executive of social trading platform Alpha Impact, said $13,800 was a potential support. According to data compiled by Bloomberg, the history of previous routs suggests that bitcoin would have to fall below $13,000 to begin to match the magnitude of those declines.

Bitcoin ended four days of declines, including a nearly 16 percent drop Wednesday, to gain about 6 percent to $16,690 on Thursday.

Sam Bankman-Fried told FTX.com investors that without a cash infusion, the company would have to file for bankruptcy, according to a person with direct knowledge of the matter.

The episode is the latest imbroglio to hit virtual currencies, exacerbating the considerable losses experienced this year as speculative fervor waned under the sobering influence of aggressive interest rate hikes.

The last big shakeup came in May, when the stablecoin TerraUSD and its twin token Luna imploded. According to the JPMorgan team, the impact on the overall value of the crypto-currency market is likely to be less significant this time around, as the TerraUSD episode has already caused a pullback in risk-taking.