JPMorgan Says Cryptocurrency Markets Are 'Looking Frothy'

Global investment bank JPMorgan says cryptocurrency markets are “looking frothy” as retail investors spill over from the stock market into cryptocurrencies and non-fungible tokens (NFTs).

Crypto Markets Look Frothy, According to JPMorgan

JPMorgan published a note Wednesday on the stock market and cryptocurrencies. It explains that retail investors bought stocks at a record pace over the summer with an estimated net flow into the U.S. stock market of $13 billion in August after reaching a record high of almost $16 billion in July.

The JPMorgan analysts asserted that the stock-buying frenzy spilled over into altcoins and non-fungible tokens (NFTs) in August, and the surge in NFTs and decentralized finance (defi) activity has boosted the price of certain cryptocurrencies, such as ethereum, solana, and cardano.

They wrote:

Cryptocurrency markets [are] looking frothy again.

As Bitcoin.com News reported, the crypto market gained approximately 83% in value over the last three months, led by altcoins. The global crypto market cap is currently $2.28 trillion. Bitcoin’s dominance slipped from 47% on Aug. 1 to 41.39% Saturday. Ethereum (ETH) currently represents 20.13% of the entire crypto market, followed by cardano (ADA) at 4.11%. Solana (SOL) represents 1.80%.

Solana has become one of the top-performing cryptocurrencies this year. At the price of $141.04 per coin, SOL is now the seventh-largest crypto by market capitalization. The coin gained 310.8% during the last month and 3,277.6% year-to-date.

The JPMorgan analysts noted that altcoin trading now represents about 33% of the crypto market, emphasizing that it was a big increase from the 22% reading in early August. They concluded:

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 investor ‘mania’ rather than a reflection of a structural uptrend.