Analysts from JPMorgan are concerned about ‘frothy’ crypto markets after the recent altcoin boom. Altcoin gains on cryptocurrency markets aren’t an entirely positive phenomenon, apparently, media sources report.
The analysts warned the bank’s clients that markets were unreliable after the August trading boom, in which spot market trading volumes topped $1 trillion again. In a note to clients, they expressed the opinion that valuations in altcoins, NFTs, and crypto markets in general were getting too high.
“The share of altcoins looks rather elevated by historical standards and in our opinion, it is more likely to be a reflection of froth and retail investor ‘mania’ rather than a reflection of a structural uptrend,” the letter reads.
The bank’s experts pointed out that at present, altcoin trading comprises a third of the total cryptocurrency market. In early August, it was under a quarter. Price increases delight many crypto traders, but analysts find the upward trend can’t be expected to be maintained for a longer period of time.
US stock retail investments peaked at $16B in July
Net inflow of US stock retail investments amounted to $13 billion in August, down from the record $16 billion in July, facilitated by Reddit-inspired day traders. Analysts believe the buying sentiment spilled over into DeFi, NFTs, and smart contract platforms, including Cardano, Solana, and Binance Smart Chain.
Spot investors push major altcoins up
CoinMarketCap data shows that Solana (SOL) is up over 400% since the beginning of August and Cardano (ADA) traded above $3 for the first time on Thursday, September 2. Spot investors contributed to this, having pushed the high market cap altcoins well above their previous all-time peaks. Moreover, Bitcoin itself passed $50,000 today, for the first time since May 2021.
NFT sector steps into limelight
NFTs stole the spotlight from the DeFi sector after the latter’s impressive start to 2021. DeFi saw trading volumes and token valuations rise to form the current bull market. With investors being distracted by other things, DeFi prices consolidated and project developers could turn their attention to protocol upgrades. Trading volume on OpenSea, one of the biggest NFT marketplaces, has increased by over 76,000% since the beginning of this year. By August 31, it had passed $4 billion.
DeFi trading volume rose 152% in August
According to data from Dune Analytics, the trading volume of DeFi coins increased by 152% month-on-month in August. Total volume passed $11 billion as a result.
