JPMorgan, which has properly predicted at least one cryptocurrency market sell-off this year, has issued a warning about "froth and retail investor enthusiasm" presently flowing through the crypto market, specifically mentioning ethereum rivals solana, Binance's BNB, and cardano.
"Not only ethereum but also alternative cryptocurrencies that facilitate or plan to facilitate smart contracts, such as solana, binance coin, and cardano, have benefited from the August rally in non-fungible tokens and the pickup in decentralized finance activity," Panigirtzoglou wrote, citing data showing that so-called altcoin trading now accounts for about 33% of the cryptocurrency market, a significant increase from 22% in early August.
"Retail investors' passion for cryptocurrency markets peaked between the beginning of January and the middle of May... and retail investors are making cryptocurrency markets appear frothy again."
As El Salvador's intention to adopt bitcoin as its official currency alongside the US dollar gets off the ground, crypto values have swung significantly this week, attracting a lot of media attention.
The price of bitcoin dropped about 20% on Tuesday, sending shockwaves through the cryptocurrency market and dropping the price of ethereum, solana, Binance's BNB, and cardano. However, most major cryptocurrencies have since recovered.
"By historical norms, the share of altcoins appears to be very elevated, and in our judgment, it is more likely to be a reflection of froth and retail investor 'mania' rather than a structural rise," JPMorgan analysts declared.
Following the dominance of solana in the altcoin market over the previous week or so, cardano is expected to regain its footing over the next week or so as anticipation builds for a scheduled update this weekend.
In an emailed remarks, Lukas Enzersdorfer-Konrad, chief product officer at crypto exchange Bitpanda, stated, "The altcoin sector has only been going in one direction with ADA as one of the best-performing assets." "Cardano's Alonzo update is just around the corner, as is the advent of smart contracts on the network, which is driving the price higher."
"Cardano is now the world's third-largest crypto, trailing only'scene stealers' bitcoin and Ethereum," said Nigel Green, CEO of financial advice firm deVere, in an emailed statement, citing Cardano's 1,668 percent price increase since January.
"As we near the end of the year, this tremendous trend is expected to accelerate even further. By the end of 2021, I predict Cardano will have reached new all-time highs, with a price of more over $4."