Rise in Altcoin Seems Unsustainable, Echoing Preparations for May’s Crypto Crash, Says JPMorgan Bitcoin Expert

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Solana is one of a handful of altcoins to have risen in recent weeks.

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The altcoin surge looks unsustainable and echoes the May stock market crash, JPMorgan crypto expert said. Nikolaos Panigirtzoglou questioned whether the rise in coins such as the cardano ada was justified. Altcoins have rallied strongly in recent weeks in the hope that they will become widely used in DeFi and for NFTs. See more stories on the Insider business page.

The recent surge in altcoins looks unsustainable and could lead to a crypto crash like the one seen in May, said JPMorgan’s digital asset expert.

Cardano’s ada, binance coin, solana and other tokens have skyrocketed in recent weeks as enthusiasm has grown around their potential use in decentralized finance (DeFi) and non-fungible tokens (NFT). Most of the bigger altcoins remain significantly higher for the month, even after the crypto market suffered a steep decline on Tuesday and another swing on Friday.

But the rally does not appear sustainable, as it is largely driven by unrealistic expectations for tokens, according to Nikolaos Panigirtzoglou, global market strategist at JPMorgan.

“There is a big question mark here,” Panigirtzoglou, who is the bank’s crypto expert, told Insider last week.

“Did the hype with cardano, binance, solana, [and other] alternatives to ethereum justified? Will there be enough traffic on these networks [and] wallet addresses, to justify this kind of evaluations? “

It appears that the crypto market is in a “meltdown” phase, he said, where investors rush into rising assets in an attempt to capture some of the gains. He noted that such a phase often precedes a sharp fall.

“I think we could have a repeat of what we saw in May,” the quarterback said. This month the crypto market – including bitcoin and ether – collapsed, following a rally in which prices for altcoins such as dogecoin and XRP soared. .

Read more: Research analyst at $ 2 billion crypto firm exposes bull for polkadot case most investors overlook – and explains why cardano’s ada appears overvalued after stellar run

Likewise, altcoins have risen sharply in recent weeks, with the solana rising 318% in the 30 days leading up to Friday morning, according to data site CoinGecko. Cardano’s ada cryptocurrency rose 29% over the same period, while XRP was 23% higher.

Retail investors have been drawn to certain tokens on the networks that they believe will challenge Ethereum to become widely used in the rapidly growing worlds of DeFi and NFT.

DeFi is the use of crypto technology to eliminate the need for intermediaries in financial contracts, and NFTs are a growing asset class of crypto collectibles and artwork.

Bobby Ong, co-founder and CEO of CoinGecko, told Insider the enthusiasm was “over the top for sure.”

He sees it as a typical crypto cycle: investors first pile into bitcoin, then turn to highly volatile alternatives in search of additional gains, before a crash forces people to exit the market. and finally to start buying bitcoin again.

Panigirtzoglou said he even saw similarities with the 2018 crypto crash, which was also preceded by an increase in altcoins and ended with a loss of over 80% in the value of bitcoin. Still, he said the crypto market was unlikely to collapse again, as financial institutions and big companies such as Tesla had endorsed it.

There are, however, dissenting voices. Curtis Ting, managing director for Europe of the Kraken crypto exchange, doesn’t see the rise in altcoins as a red flag. He said a strong sell-off in cryptos like the one seen on Tuesday “is helping the market reset.”

“An increase in altcoins helps diversify the asset class and create a feedback loop that could ultimately benefit the price of bitcoin,” he told Insider.

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