JPMorgan Chase: Altcoins are bursting out, Bitcoin's dominance is about to fall below 40%, and concerns about market bubbles reappear

A recent analysis released by JPMorgan Chase stated that the recent sustained rebound in the crypto market is mainly led by altcoins, which should be regarded by investors as a major danger signal that the arrival of a new altcoin season is a sign of a market bubble: "The cryptocurrency market [is] seeing a bubble again."

Altcoins lead the market gains

The report said that as investors flocked to NFT tokens, the stock buying frenzy also spread to "altcoins" in August. The surge in NFT and DeFi activities not only helped Ethereum, but also helped cryptocurrencies that promote smart contracts such as Solana and Cardano to surge.

Data from Bitpush Terminal shows that ADA surpassed the $3 price level for the first time earlier today. The cryptocurrency has been rising steadily in anticipation of the launch of its smart contract on September 12, with a year-to-date increase of more than 1,500%.

As a high-throughput "Ethereum killer", Solana is benefiting from the booming DeFi and the craze in the NFT market. According to Bitpush terminal data, Solana's market value recently entered the top 10 list, and the SOL token has risen by more than 7,000% since the beginning of the year.

JPMorgan noted that altcoins now account for about 33% of the cryptocurrency market, a sharp surge from 22% in early August. “Altcoins’ share looks quite high by historical standards and, in our view, is more likely a reflection of froth and retail investor ‘mania’ than a reflection of a structural uptrend,” the analysts concluded.

However, the recent gains in altcoins’ share of the cryptocurrency market have not been as dramatic as they were at the beginning of the year, when altcoins’ share nearly tripled from 13% in January to 37.6% in May.

“Be fearful when others are greedy”

BitPush previously reported that in June, JPMorgan Chase's global market strategist Nikolaos Panigirtzoglou pointed out that Bitcoin's dominance is a key indicator for determining the bear market stage. Its continued decline may mean that a major adjustment may be coming, as exuberant market participants tend to bet more actively on altcoins due to growing risk appetite.

In mid-May, Bitcoin’s dominance fell to around 39%, when the investment frenzy for canine tokens such as Dogecoin was in full swing. On May 19, the crypto market retreated across the board, and it took more than three months for the market to return to its previous highs.

In early January 2018, as Bitcoin began to retreat from its all-time high of $20,000, altcoins’ share of the cryptocurrency market hit an all-time high of 55%, with Bitcoin’s dominance falling to 33%, a record low to date, coinciding with the height of ICO mania and the peak of the previous bull run.

Bitcoin's market share is currently 40% after reaching a year-to-date peak of 69% in early January. As the largest cryptocurrency, Bitcoin's current price is still too high for many investors. Speculators are hoping to find the next opportunity to get rich, and low-priced altcoins also mean that investors can accumulate a large number of tokens and wait for the asset to hit a record high. However, the market should pay more attention to market capitalization and the number of available tokens rather than actual prices, although this can only be done by experienced investors. Data from the Alternative.me website shows that on September 2, the Crypto Fear/Greed Index was 74, while the index was neutral last month. Excessive greed indicates that investors are too excited and the market may adjust.