Earlier this week, investment bank JPMorgan released investor notes suggesting that the cryptocurrency markets have become bloated again, with market conditions appearing more bubble-like than anticipated. “Cryptocurrency markets are looking frothy again,” the investment note read. The note, which was released last Wednesday, suggested that retail investors’ appetite for digital assets skyrocketed alongside traditional equities.
Bitcoin’s share in the overall crypto market cap had declined from 47 percent on August 1 to 41.32 percent on Sunday while Ethereum’s (ETH) grew slightly from 18 percent to 20 percent, followed by Cardano (ADA), Binance Coin, and Tether, as per Coinmarketcap. Retail demand spiked to record highs, thanks to historically low-interest rates and the Fed’s dovish outlook for the remainder of the year. Analysts at JP Morgan estimated a net flow of $13 billion into the U.S. stock market in August alone — up substantially from $16 billion in July. The crypto market value had gained around 83 percent over the last three months, led by altcoins.
According to JPMorgan Research:
JPMorgan research concluded that the massive influx of capital also had an impact on cryptocurrencies. Certainly, a retail buying frenzy played a major role in the resurgence of the crypto markets late into the summer. Currently, altcoin trading represents about 33 percent of the crypto market, which is considerably higher than up to early August when it accounted for 22 percent. “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.”
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In April of this year, JPMorgan announced it would use blockchain technology to improve funds transfers between banking institutions globally. An investment banking firm reports that the bank launched ‘Confirm’ in an effort to reduce the number of “rejected or returned transactions caused by mismatched payment details.” As a result, the solution will lead to lowering costs for both the sending and receiving banks. Confirm is a global account information validation application on JPMorgan’s blockchain network through which partner banking institutions, according to the company, will be able to request confirmation of the beneficiary account information and receive responses directly from other participating banks receiving the requests in near-real-time.
The major investment bank remains cautious of the rapidly expanding alternative asset class; still, there are no tell-tale signs that suggest crypto’s parabolic growth will slow down soon — at least for now.