- JPMorgan analysts have sounded the alarm over frothy crypto markets involving altcoins, NFTs, DeFi and smart contracts.
- The entire crypto market saw a spike in trading volume in the month of August.
Analysts at investment banking company at JPMorgan have sounded the alarm on ‘frothy’ crypto markets following the August buzz. The JPMorgan analysts have warned inventors that the crypto markets are now appearing frothy. Last month, the trading volume in the entire crypto space reached $1 trillion again, creating a market boom.
JPMorgan shows concerns about frothy crypto markets
According to analysts, some crypto assets have already surged higher than their objective worth. Apart from valuations in the crypto space, the JPMorgan analysts also mentioned the ever-increasing value of non-fungible tokens (NFTs). The analysts wrote:
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 investors ‘mania’ rather than a reflection of a structural uptrend.
Furthermore, the analyst gave a breakdown of the altcoin trading performance over the past month. As of the beginning of August, altcoin trading was just about 22 percent of the total crypto market. However, trading has now gone up to around 33 percent in a month. Apparently, a lot of crypto traders are satisfied with the increased value of altcoin prices. However, the bank’s analysts are concerned that the rise may not exist for so long.
Additionally, the analysts mentioned the net inflow of retail investments to US stocks. After hitting a record level of $16 billion in July, the net inflow stood at $13 billion in August. According to the bank, some day traders were influenced by Reddit, causing the buying frenzy. Now, the analysts believe that the buying mania has crossed over to the NFT SOACE, DeFi and smart contract platforms such as Cardano, Solana, and Binance Coin.
Altcoins’ outstanding performance
Already, a lot of altcoins have surged past their previous all-time highs as trading volume spikes with the frothy market. For the first time in history, Cardano traded above $3. Although the cryptocurrency is down about 1 percent, the coin still has maintained above the $3 price level. Solana (SOL) has gained more than 400 percent since the beginning of August. At press time, the 7th largest crypto by market cap is trading at $143.04. Also, the altcoin has jumped nearly 24 percent over the past 24 hours. In addition, Bitcoin also crossed $50,000 for the first time since the mid-May crash. Currently, Bitcoin is up 0.43 percent at $50,029.
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As altcoins participate in the frothy market, NFTs are not left behind. Trading volume on top NFT marketplace OpenSea has risen exponentially since the year began. Data showed the trading volume of NFTs on OpenSea reached $4 billion as of the 31st of August.
Similarly, the trading volume of DeFi coins gained 152 percent in August, compared to the previous month. As such, the total trading volume surged over $11 billion.