A new risk of a market crash? Why the growth of altcoins can turn into a fall

New risk of market collapse? Why Altcoin Growth May Turn Downward

JPMorgan analysts have warned their clients about the overheating of the crypto market. Why the altcoin market may enter a correction phase and when will it start

The share of altcoins on the crypto market in August increased to 33%. In early August, this figure was 22%. Analysts at investment bank JPMorgan warned that the share of altcoins approached the value that was observed in May this year before the collapse of the crypto market (37.7%).

Then the price of bitcoin per day fell by more than a third and fell to $ 30 thousand for the first time since January. RBC-Crypto experts explained whether it is worth fearing an increase in the share of altcoins and whether there is a possibility of a new collapse.  In May, the capitalization of the digital asset market exceeded $ 2.6 trillion. On September 3, this figure is $ 2.36 trillion. Based on this, one cannot say that the market is overheated, the analyst believes.

A new risk of a market crash? Why the growth of altcoins can turn into a fall

According to Pershikov, the fact that the share of altcoins has grown significantly speaks only of the onset of the «altseason» — a period of investor demand for high-yield medium- and low-capitalized assets, which give a yield that exceeds the yield of other instruments.

“As soon as bitcoin goes to renew its historical highs in the coming months, investors will start pouring profits from alts into the main cryptocurrency, as it happens regularly and cyclically,” added Pershikov.

After that, bitcoin will begin to grow and renew highs and altcoins will enter a correction phase, the analyst predicts. According to him, such a «swing» is standard for the crypto market.

Altcoins cannot grow forever, warned Nikita Soshnikov, director of the Alfacash cryptocurrency exchange service. If by the time altcoins run out of growth potential, bitcoin does not budge, then investors will begin to take profits and move capital to stablecoins, the expert explained.

“This creates high risks of a fall in the entire crypto market, not just bitcoin. But even in this scenario, which is very likely, Bitcoin is unlikely to fall below $ 40 thousand, » Soshnikov is sure.

After a significant growth in August, the altcoin market expects a rollback, financial analyst at Currency.com crypto exchange Mikhail Karkhalev is sure. In his opinion, investor interest in altcoins increased in August due to the popularity of non-fungible tokens (NFT) and decentralized finance (DeFi). Similar projects work on the Ethereum, Cardano, and Polkadot blockchains.

The share of altcoins on the cryptocurrency market will grow for another two weeks maximum, Soshnikov predicted. In his opinion, after that, investors who entered altcoins on time will start fixing profits.