In a recent note quoted by Business Insider, JPMorgan argues that the ongoing rally should be perceived by crypto investors as the main red flag.
JPMorgan: More like foam and mania
The largest US bank believes that the renewed altseason is a sign of market foam:
“The crypto market looks foamy again.”
JPMorgan points out that alternative cryptocurrencies now share a third of total market capitalization.
Cardano crossed the $ 3 mark for the first time today. The cryptocurrency was on the rise in anticipation of its launch of smart contracts, which was scheduled for September 12. In 2021, the value of the ADA increased by more than 1,500%.
Solana recently made it into the top 10 of the CoinMarketCap rankings, growing by more than 70% in a single week. The high-performance “Ethereum killer” is benefiting from the boom in decentralized financial space and the mania over nonfungible tokens (NFT).
JPMorgan maintains that the current growth trend is driven by additional retail mania instead of technical factors:
“The share of altcoins looks relatively high by historical standards and, in our view, is a reflection of the foam and ‘mania’ of retail investors rather than a structural upward trend.”
Be afraid when others are greedy
In June, Nikolaos Panigirtzoglou, JP Morgan’s global market strategist, remarked that BTC’s dominance was a key indicator to consider when determining the stages of the bear market.
Its steady decline could mean that a significant correction is imminent, as excited market participants tend to bet on altcoins more aggressively due to a growing appetite for risk.
In mid-May, the BTC dominance indicator reached its bottom at around 39%, when the Dogecoin madness was in full force. This market euphoria was preceded by a significant correction, which took place on 19 May. It took more than three months for the market to recover to previous highs.
At the beginning of January 2018, BTC’s dominance fell to its current all-time low of just 33%, coinciding with the peak of the ICO mania and the peak of the previous bull series.
BTC currently has a market share of 42% after reaching its peak of 69% in early January.
Maybe there will be something to what JPMorgan says. After all, historical facts speak for themselves. What do you think about that?