JPMorgan raises the alarm over “frothy” crypto markets after the August boom


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JPMorgan analysts have warned clients that cryptocurrency markets are looking frothy after the August trading boom brought spot market trading volumes back above $ 1 trillion.

In a message to clients reported by Markets Insider, JPMorgan analysts suggested that valuations of crypto markets, especially altcoins and NFTs, are getting too high.

“The percentage of altcoins looks quite high in historical comparison and in our opinion is more a reflection of the foam and small investor ‘mania’ than a reflection of a structural upward trend.”

The bank’s analysts found that altcoin trading now accounts for about 33% of the total cryptocurrency market, up from just 22% in early August.

While many crypto traders are excited about the price hikes, analysts believe the apparent surge in interest may not be significant enough to be sustained for an extended period of time.

The analysts also highlighted the net inflow of retail investment in U.S. stocks, which with the help of Reddit-inspired day traders was $ 13 billion as of August, after a record high of $ 16 billion in July. They believe the buying frenzy has spilled over to NFTs, DeFI, and smart contract platforms like Solana, Binance Coin, and Cardano.

Spot investors have pushed several large altcoins well above their previous all-time highs. Cardano (ADA) traded above $ 3 for the first time today, and Solana (SOL) is up over 400% since early August, according to CoinMarketCap.

Bitcoin has also shown tremendous strength, surpassing $ 50,000 for the first time since May 2021.

Similarly, increases in activity and token prices show that “DeFi Summer 2.0” has already started

Meanwhile, OpenSea, one of the largest NFT marketplaces, has seen trading volume on its platform increase by over 76,000% since early 2021. The trading volume exceeded $ 4 billion by August 31, according to DappRadar.

DappRadar numbers for OpenSea in August

The numbers from Dune Analytics show that the trading volume of DeFi-Coins in August increased by 152% compared to the previous month and the total trading volume rose to over 11 billion US dollars. Several trading platforms and DeFi protocols hit milestones, with Uniswap surpassing Coinbase’s daily trading volume on Aug. 30 and Synthetix exceeding 1 billion.