JPMorgan Chase, the largest bank in the United States, has issued a cautionary statement on the performance of altcoin trading, stating that alternative cryptocurrencies are currently exceeding their true value.
Based on its most recent analysis, the investment bank announced that retail investors bought stocks at higher interest rates over the summer, which helped drive the markets to step up their price action.
The bank estimates that retail investors have pumped billions of dollars into the U.S. stock market, which hit a record high of nearly $ 16 billion in July and was around $ 13 billion in August. JPMorgan compared that performance to the way private investors put funds into US stock last year, which saw an investment of $ 10 billion in June 2020.
According to JPMorgan, the buying frenzy on the exchange extended to altcoins last August as well, as investors piled into non-fungible tokens. Interest in DeFi and NFTs activities has helped Ethereum and cryptocurrencies facilitate smart contracts such as: Cardano, Binance Coin and Solana go up.
Yesterday, Thursday, September 2, Cardano rose above the USD 3 price level for the first time in history. The ADA price will rise again in anticipation of the smart contract launch on September 12th. Since the beginning of this year, ADA has grown in value by more than 1,600%.
On the flip side, Solana has recently climbed into the top ten cryptocurrencies on CoinMarketCap and has seen its profits exceed 7000% since the start of the year. The profitable “Ethereum killer” is using the growing DeFi industry and NFT mania to reach new all-time highs.
With its market analysis, JPMorgan determined that cryptocurrency investors should view the current rally as a big red flag and found that the renewed altcoin season is a symptom of a market bubble.
“Cryptocurrency Markets [are] looks frothy again, “said JPMorgan – that is, the cryptocurrency markets seem to be bubbling again.
According to JPMorgan, alternative cryptocurrencies now account for around 33% of total market capitalization, a huge increase from 22% in early August.
The bank believes that another private investment craze is driving the current uptrend rather than technical indicators:
“Altcoin holdings look pretty high by historical standards, and we think they are more a reflection of the froth and” mania “of individual investors than a structural uptrend,” noted JPMorgan.
According to Nikolaos Panigirtzoglou, JP Morgan’s global market strategist, Bitcoin’s dominance is the main indicator to watch when determining bear market phases. Its steady decline could indicate that a major correction is imminent, as ardent market investors tend to be more aggressive in Altcoins due to their increased risk appetite.
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