JPMorgan analysts warned their clients that the crypto market is overheating. Why the altcoin market may enter a correction phase and when it will start
The share of altcoins on the crypto market increased to 33% in August. At the beginning of August, the figure was 22%. Analysts at investment bank JPMorgan warned that the share of altcoins is close to the value observed in May this year before the collapse of the crypto market (37.7%). Then the price of bitcoin for the day fell by more than a third and went down to $30 thousand for the first time since January. RBC-Crypto experts explained whether the growth of altcoins should be feared and whether there is a possibility of a new collapse.
The capitalization of the crypto market is now below the highs of this year, recalled Victor Pershikov, lead analyst at 8848 Invest. In May, the capitalization of the digital assets market exceeded $2.6 trillion. On September 3, that figure was $2.36 trillion. Based on this, one cannot say that the market is overheated, the analyst believes.
According to Pershikov, the fact that the share of altcoins considerably increased speaks only about the beginning of “altseason” – the period of investors’ demand for high-yielding mid- and low-capitalized assets, which give a yield exceeding the yield of other instruments.
“Once bitcoin goes to a renewed historic high in the coming months, investors will begin to pour profits from alts into the major cryptocurrency, as they do regularly and cyclically,” Pershikov added.
After that, bitcoin will start to grow and updΠ°te highs, and altcoins will move into the correction phase, the analyst predicts. According to him, such “swings” are standard for the crypto market.
There is a chance of correction
Altcoins cannot grow forever, warned Nikita Soshnikov, director of the cryptocurrency exchange service Alfacash. If bitcoin does not move by the time altcoins have exhausted their growth potential, investors will begin to fix profits and move capital to stabelcoins, the expert explained.
“This creates high downside risks for the entire crypto market, not just bitcoin. But even in this scenario, very likely, bitcoin is unlikely to fall below $40,000,” Soshnikov said confidently.
After significant growth in August the market of altcoins expects rollback, the financial analyst of cryptocurrency exchange Currency.com Michael Karkhalev is sure. In his opinion, investors’ interest in altcoins increased in August due to the popularity of non-interchangeable tokens (NFT) and decentralized finance (DeFi). Such projects run on Ethereum, Cardano, and Polkadot blockchains.
The share of altcoins in the cryptocurrency market will grow for two more weeks at most, predicted Soshnikov. According to his opinion, after that investors, who have entered into altcoins in time, will start to fix profits.