The massive altcoin rally in recent weeks may have inspired many retail traders to dive back into crypto markets, but analysts at JPMorgan Chase & Co. (CRYPTO: JPM) aren’t so sure that this momentum will sustain.
What Happened: According to a report from Markets Insider, JPMorgan warned that crypto markets are “looking frothy again” in a note to investors earlier this week.
In particular, the native crypto tokens of certain smart contract platforms like Solana (CRYPTO: SOL), Cardano (CRYPTO: ADA), and Ethereum (CRYPTO: ETH) clocked three-digit percentage gains most over the past few months.
However, JPMorgan believes that this has less to do with the organic growth and adoption of individual platforms and more to do with the actions of Reddit-inspired day traders.
Attributing most of the price action to a buying frenzy from retail investors that spilled over into altcoins, NFTs and DeFi, the analysts noted that altcoins now represent 33% of the crypto market compared to just 22% at the beginning of August.
“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,” they said.
Price Action: At press time, the leading digital asset Bitcoin (CRYPTO: BTC) was trading above $50,626, gaining 1.85%% over the past 24-hours.
Meanwhile, Solana hit another all-time high of $141.50, rallying as much as 22.81% in the past day.
Ethereum also gained 5.27% over the past day and looked to reclaim $4,000. At the time of writing, ETH was trading at $3,978.
See more from Benzinga
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.