JPMorgan Chase urges caution in the crypto markets as altcoins rally

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The largest bank in the United States, JPMorgan Chase, has issued a warning about altcoin trading performance, claiming that alternative cryptocurrencies are soaring beyond their true value.

According to the investment bank’s recent study, individual investors have acquired equities at greater rates throughout the summer, causing markets to spike price movements.

According to the bank, retail investors pushed billions of dollars into the US stock market, which peaked at almost $16 billion in July and dropped to approximately $13 billion in August. JPMorgan likened this performance to how individual investors poured money into US stocks last year, with a $10 billion investment made in June 2020.

According to JPMorgan, in August of last month, the stock market’s purchasing frenzy spilled over into altcoins as investors poured into non-fungible tokens. In addition, the popularity of DeFi and NFTs has boosted Ethereum and other cryptocurrencies that support smart contracts, including Cardano, Binance Coin, and Solana.

Cardano broke through the $3 price barrier for the first time on Thursday, September 2. In preparation for the smart contract launch on September 12, the ADA price is rising again. ADA’s value has grown by more than 1,600% since the beginning of the year.

On the other hand, Solana has recently moved into CoinMarketCap’s top 10 cryptocurrencies, increasing its year-to-date gains to over 7000 percent. The high-yielding “Ethereum killer” takes advantage of the expanding DeFi sector and the NFT craze to reach new highs.

JPMorgan warned cryptocurrency investors in its market research that the recent surge is a major warning signal and that the revived altcoin season is a symptom of a market bubble.

According to JPMorgan, cryptocurrency markets are “looking frothy again” – that is, they appear to be bubbling again.

According to JPMorgan, alternative cryptocurrencies now account for over 33 percent of total market capitalization, up 22 percent in early August.

Rather than technical indications, the bank believes that another retail investment frenzy is driving the present uptrend:

“The share of altcoins looks fairly high by historical standards, and we think it is more likely to be a reflection of foam and individual investor “mania” rather than a structural uptrend,” JPMorgan noted.

According to JP Morgan global market strategist Nikolaos Panigirtzoglou, the primary signal to watch for defining bear market periods is Bitcoin domination. Because of their rising risk-on appetite, enthusiastic market participants prefer to invest more aggressively in cryptocurrencies, which might indicate that a significant correction is on the horizon.

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