According to investment bank JPMorgan, many cryptocurrencies have limited upside potential as the share of stablecoins relative to the total digital currency market has noticeably declined.
The share of stablecoins fell to 7% from 10%, the bank estimated. At the moment, stablecoins are viewed as cash that is used to buy cryptocurrencies.
JPMorgan specialists analyzed the recent surge in bitcoin and ether, which had started in early March 2022. Bank analysts concluded that anti-Russian “sanctions had raised expectations that cryptocurrencies will be used more extensively in the future to circumvent the traditional banking system.” However, these assumptions came to nothing.
JPMorgan experts believe that the cryptocurrency rally seems to be on its last legs as stablecoins are experiencing a swift decline in their share in the overall crypto market cap.
Earlier, stablecoins accounted for 10% of the total crypto market capitalization. Such a high share pointed to further upside for the digital currency market and provided crypto investors with additional opportunities.
So far, bitcoin and ether have been up by 30% from their February lows. This growth was caused by bitcoin fund inflows that helped boost demand for BTC. However, this led to a decline in stablecoins.
“The share of stablecoins in total crypto market cap no longer looks excessive and as a result we believe that any further upside for crypto markets from here would likely be more limited,” JPMorgan summed up.
