JPMorgan: Cryptocurrency Markets are Looking Frothy

Altcoins have gained a leading position in the digital currency markets, yet JPMorgan researchers are concerned.

JPMorgan researchers have cautioned investors that digital currency markets are appearing frothy following the August trade surge, which saw spot rates transaction volumes surpass $1tr for the first time.

As per Markets Insider reports, the financial giant’s researchers stated in a letter to investors that virtual currencies market values, particularly non-fungible tokens and altcoins, are becoming insanely high. The proportion of altcoins appearing to be excessive by industry standards; therefore, we believe it is far more probable to be a manifestation of froth and trader frenzy than an indication of an increase.

Researchers at the financial institution observed that altcoins now represents around thirty-three percent of the crypto market, increasing from 22% somewhere at the start of August. Despite the fact that many virtual currency investors are happy with the market gains, researchers say the perceived surge in demand may not even be sustained for a considerable length of period.

The researchers also emphasised the overall influx of consumer purchases into US equities, which remained at $13b in August thanks to Reddit-motivated day investors after reaching a historic level of $16b in the month prior to August. They think the purchasing frenzy has spread to the smart contract, Non-Fungible Tokens and decentralised finance platforms such as BSC, Cardano and Solana.

Spot traders have driven many prominent crypto assets to new record highs. As per CoinMarketCap, ADA exchanged well over three dollars for the very first moment this Thursday, while SOL has gained more than four hundred percent ever since the start of August. BTC, too has demonstrated great resilience, rising beyond $50k for the very first occasion as of May.

Conversely, OpenSea, another of the major Non Fungible Token markets, has now seen a volume of trade all over its network grow by more than 76 percent ever since the start of the current year.

As per DappRadar, transaction volume has reached $4b on the 31st of August 2021. As per Dune Data, the transaction volume of Decentralized Finance coins surged one hundred and fifty-two percent month over month in Aug, pushing overall trading activity above $11b. Uniswap surpassed Coinbase’s average trading activity on Monday, whereas Synthetix regained $1b in overall value held.

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