- The surge in
altcoins looks unsustainable and has echoes of May's market crash, JPMorgan'scrypto expert has said. - Nikolaos Panigirtzoglou questioned whether the rise in coins such as
cardano 's ada was justified. - Altcoins have rallied sharply in recent weeks on hopes that they'll become widely used in DeFi and for NFTs.
The recent surge in altcoins looks unsustainable and could lead to a crypto crash of the sort seen in May, JPMorgan's digital assets expert has said.
Cardano's ada,
But the rally doesn't look sustainable, as it's largely driven by unrealistic expectations about the tokens, according to Nikolaos Panigirtzoglou, a global market strategist at JPMorgan.
"There is a big question mark here," Panigirtzoglou, who is the bank's crypto expert, told Insider last week.
"Is the hype with cardano, binance, solana, [and other] alternatives to ethereum justified? Will there be enough traffic in these networks [and] wallet addresses, to justify these kind of valuations?"
It appears as though the crypto market is in a "melt-up" phase, he said, in which investors rush into assets that are rising in an effort to capture some of the gains. He noted such a phase often precedes a sharp fall.
"I think we could have a repeat of what we saw in May," the strategist said. That month saw the crypto market - including $4 and $4 - crash, following a rally in which altcoins such as dogecoin and XRP rocketed in price.
Read more: $4
Likewise, altcoins have rallied sharply in recent weeks, with solana up 318% in the 30 days to Friday morning, according to data site CoinGecko. Cardano's ada cryptocurrency was up 29% over the same period, while XRP was 23% higher.
Retail investors have been drawn to certain tokens on networks that they expect will challenge ethereum to $4 in the fast-growing worlds of DeFi and NFTs.
DeFi is the use of crypto technology to remove the need for middlemen in financial contracts, and NFTs are a booming asset class of crypto collectibles and artworks.
Bobby Ong, cofounder and CEO of CoinGecko, told Insider that excitement was "overblown, for sure."
He sees it as a typical crypto cycle: Investors first pile into
Panigirtzoglou said he even saw some similarities with the crypto crash of 2018, which was also preceded by a surge in altcoins and ended with bitcoin losing more than 80% of its value. Yet he said the crypto market was unlikely to crash that hard again, because financial institutions and big companies $4 had bought in.
There are dissenting voices, however. Curtis Ting, managing director for Europe at crypto exchange Kraken, doesn't see the rise in altcoins as a red flag. He said a sharp sell-off in cryptos of the sort seen on Tuesday "helps the market reset itself."
"A surge in altcoins helps diversify the asset class and create a feedback loop that could ultimately benefit the bitcoin price," he told Insider.