By Shelly Melancon (Switzerland)
The altcoins’ breakout early in the week came as a shock to market observers as Bitcoin remained below $50k consolidating and waiting to cross the zone. Now, the frenzy altcoins generated has attracted the attention of US banking giant JP Morgan. JP Morgan has cautioned investors that the altcoins’ rally may likely be a ‘froth.’
The altcoins’ revolt earlier this week was led by the largest altcoin, Ethereum. Ethereum had broken through the resistance zone of $3,400. However, this may not stand the test of time, the US banking firm has revealed. JP Morgan has advised investors to consider this as a major red flag because of the sudden surge. Altcoins now comprise a third of the market cap, according to JP Morgan.
Cardano and Solana Trail Ethereum in Altcoins’ Surge
Spearheading the altcoins’ surge apart from Ethereum is Solana and Cardano. Solana has had a great performance since the past week moving by 70% from the lower rungs of $34 to an all-time high of $130. Solana, touted as an ‘Ethereum Killer’ is benefiting from the craze in DeFi and non-fungible tokens (NFTs). Alongside the high-profile and first generation NFTs, CryptoPunks, which have been generating a large trading volume on OpenSea, SolPunks have emerged also sharing in the popularity of the former.
Also read:On its part, Cardano crossed a new milestone on Thursday, after moving to a $3 price mark for the first time since creation. Riding on the momentum of the impending smart feature themed Alonzo, Cardano has been propped up for greater milestones. Alonzo is due for launch by September 12. Interestingly, the coin has risen by over 1500% since the start of 2021.
Altcoins’ Surge Driven by Hype
Beyond all this, JP Morgan is of the opinion that the altcoins’ frenzy is driven by hype and not by any technical factors. Strategist at the banking firm, Nikolaos Panigirtzoglou has advised that the dominance of Bitcoin is a key indicator to look at in order to ascertain bear market phases. A regular decline is indicative of a potential market correction since the greed of investors have been activated owing to the surge on altcoins.
Meanwhile, the global banking giant may be wrong in view of its inaccurate prediction in July, where it noted that Bitcoin would bottom out at $25k following the unlocking of Grayscale’s Bitcoin Trust on July 19.
Historically, September is a bearish month, but the recent trends in the market have proven otherwise. Bitcoin is now trading above $50k after moving from its consolidation zone on Monday. Ethereum is still short of its May $4k+ ATH.
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