JPMorgan raises alarm about 'frothy crypto markets' after August boom

JPMorgan analysts warned clients that cryptocurrency markets look frothy following the August spot market trading boom, which saw spot market trading volumes again surpass $1 trillion.

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

"The Altcoins share looks quite elevated by historical standards. We believe it is more likely to reflect froth or retail investor mania than a structural uptrend."

Analysts at the bank noted that altcoin trading accounts for 33% of the total cryptocurrency marketplace, up from 22% at August's beginning.

While many crypto traders delight in the price rises, analysts think that the apparent increase in interest may not last for a long time.

Analysts also pointed out the net inflow of retail investment to US stocks of $13B through August, with Reddit-inspired day traders helping. This follows a record $16B in July. The analysts believe that the buying frenzy has spilled into NFTs and DeFI as well as smart contract platforms such Solana and Binance Coin.

Numerous altcoins have seen their prices rise by spot investors, pushing them to new highs. According to CoinMarketCap, Cardano (ADA), traded above $3 today, while Solana (SOL), is up more than 400% since August's beginning.

Bitcoin has also shown tremendous strength by rallying back above $50K for the first time since May, 2021.