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.
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.
Increased Retail Demand for Crypto Played Major Role in Recovery, JP Morgan
The JPMorgan research team asserted that the massive influx of capital had also found its way into cryptocurrencies. It’s certainly possible that a retail buying frenzy played a key role in the resurgence of the crypto markets late into summer.
Heavyweights Bitcoin (BTC) and Ethereum (ETH) plummeted over 50% following their all-time highs back in May. Prices began to recover in late July, with BTC and ETH rallying approximately 55% and 90%, respectively.
The gains of the two largest cryptocurrencies, however, pale in comparison to the altcoins and non-fungible tokens that have exploded in popularity. As DeFi found its latest use case in NFTs, projects such as Solana rallied to record highs. Per Tradingview, Solana is up 390% in the past month alone, while being up 7,000% YTD at press time.
Bitcoin’s dominance has also continued to slip. As Ethereum and other coins such as Cardano, Ripple, and Binance Coin surged higher, BTC’s total market share in market capitalization dipped to 41.23% — down from 73.78% at the beginning of the year.
JP Morgan Reports Bitcoin Continuing to Lose Its Market Share, with Altcoins on the Rise
The JPMorgan analysts also wrote that altcoin trading represents approximately 1/3rd of the crypto market. It remains unclear whether the figure only accounted for spot market volume; nonetheless, it was a substantial increase from 22% in early August.
“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.”
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.
Victory Capital files SEC application for crypto ETF
Investment firm Victory Capital Management has filed an application with the United States Securities and Exchange Commission (SEC) for a cryptocurrency exchange-traded fund.
In a Form S-1 registration filed Tuesday with the regulatory body, Victory said it intended to move forward with listing an exchange-traded fund, or ETF, tracking the Nasdaq Crypto Index. The index consists of eight cryptocurrencies: Bitcoin Ether (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Chainlink’s LINK, Stellar’s Lumen (XLM), Filecoin (FIL) and Uniswap’s UNI.
“A potential future ETF offering will provide our clients with convenient exposure to multiple coins while introducing a new asset class for their portfolios,” said Mannik Dhillon, president of VictoryShares, Victory Capital’s ETF provider.
The SEC has not yet approved any crypto ETF in the United States. Companies including VanEck, Valkyrie Digital Assets and Fidelity Investments have applied for registering crypto ETFs with the SEC, but the regulatory body has delayed any final decision by using extensions and opening the matter to public comments.
Victory announced in June that it would be taking steps for its U.S.-based investors to get exposure to the crypto market. The firm said it would launch a private fund for accredited investors tracking the Nasdaq Crypto Index and private funds that will track the Nasdaq Bitcoin Reference Price Index and the Nasdaq Ethereum Price Index.
As of June 30, Victory Capital had more than $161 billion in assets under management. The price of Victory Capital Holdings’ stock on the Nasdaq under the ticker VCTR has risen more than 9% in the last week to reach $31.95 at the time of publication.
Victory Capital Files S-1 with SEC to Launch New Crypto ETF
Victory Capital Digital Assets, LLC, has filed with the SEC to launch a new crypto ETF based on the NASDAQ crypto index
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