Major cryptocurrencies are aiding in the spread of crypto malware.

Major cryptocurrencies are aiding in the spread of crypto malware and enabling an upswing in cyber attacks. V&E loans, on they other hand, haven't shown any change; they're doing steady business as usual.

In a report released Wednesday, JPMorgan (JPM) noted that the collapse of the crypto hedge fund Three Arrows Capital (3AC) indicates that the effects of this year's cryptocurrency market slump continue to be felt, the bank said.

In spite of the difficulty of estimating how much further de-leveraging needs to happen, the bank said that its indicators suggest that it is already well advanced.

The report warns that the industry is at risk of failure given the economic backdrop of deleveraging and the 70% drop in digital asset market capitalization since November.

The entities that were using the highest leverage in the past are now the most vulnerable, the bank explained. "These could be miners who have borrowed to expand operations using their bitcoin as collateral, or corporations such as MicroStrategy (MSTR) who have borrowed in the past to invest even more heavily into bitcoin, or hedge funds who use futures to lever their positions, or retail investors borrowing via margin accounts to invest in different cryptocurrencies."

The note says that the failure of 3AC is a manifestation of this deleveraging process, and it goes on to say that the process seems well advanced, “making bottom formation in crypto markets more volatile.”

JPMorgan (JPM) said that the miners who mine Bitcoin (BTC) are a source of stress for crypto markets, because they have to sell their tokens to deleverage or cover their operational costs. The selling of bitcoins by miners intensified in June, and it will likely continue into the third quarter, JPM said.

The crypto companies with the weakest security, high leverage and low capital levels, are the most vulnerable. The firms that have the strongest financials are likely to survive this phase and will be stronger when it's over, as stated in the report.

JPMorgan mentions two reasons that suggest the cycle could be short-lived: Stronger crypto companies with healthier balance sheets have stepped in to contain contagion, and the healthy pace of venture capital (VC) funding, a key source of funds for the digital assets ecosystem, has continued.