As altcoins spike heavily in recent weeks, many analysts and crypto heads are worried that the digital currency space is heading into dangerous territory similar with what it saw last May.
Altcoins Are All the Rage Right Now
About four months ago, the digital currency arena saw many assets spiking unexpectedly. Bitcoin, for example, had just reached a new all-time high of approximately $64,000 per unit, while Ethereum also hit a new peak of about $4,000. Many altcoins and competitors to BTC saw their prices jumping to unprecedented levels, though this eventually came back to bite them in the butt.
It wasn’t long before the crypto space saw a nasty dive that ultimately took prices down to their lowest points in many months. Bitcoin lost more than 50 percent of its value at one point, falling (albeit briefly) into the $29,000 range, while ETH fell below $3,000. Many analysts are seeing rises in altcoin prices as of late that are comparable to what happened last May. Thus, there is heavy concern that the same falls could occur not too far down the line.
Assets like Cardano’s ADA, Binance Coin, and Ethereum-competitor Solana have jumped in recent weeks given that many traders are excited about their growing presences in the world of decentralized finance (defi). What’s interesting is that many of these altcoins remain in higher positions despite a recent market selloff that caused several mainstream cryptocurrencies to experience solid drops, so the big question is, “How long before these altcoins slip, and how big will those slips be?”
According to Nikolaos Panigirtzoglou – a global market strategist at JPMorgan – says the current altcoin rally is not sustainable and may lead to a heavy period of gloom and doom for interested traders. In a recent interview, he stated:
There is a big question mark here. 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 kinds of valuations?
He says that what’s common is for investors to rush mindlessly into the world of altcoins that are spiking as a means of capturing small gains along the way. He says that this behavior never leads to positive results, and that the market may fall in the coming weeks. He comments:
I think we could have a repeat of what we saw in May.
Maybe Things Aren’t as Scary as They Look
At the time of writing, Solana is up by approximately 318 percent. Cardano’s ADA is up by close to 30 percent, while Ripple’s XRP is trading for about 23 percent higher over the past few weeks.
Curtis Ting – managing director for Europe at crypto exchange Kraken – is one of the few analysts that doesn’t see this leading to anything negative. Rather, he feels that altcoins are helping the market to “reset itself.”