The cryptocurrency market, known for its rapid growth and innovation, has seen its fair share of successes and failures over the years. A recent analysis conducted by CoinGecko, a leading cryptocurrency data platform, sheds light on the stark reality that over 50% of all cryptocurrencies listed on their platform since 2014 have met their demise. These findings come as a reminder of the inherent volatility and challenges in the crypto space.
A Staggering Number of Defunct Tokens
Out of the 24,000 tokens that have ever graced CoinGecko’s platform, a staggering 14,039 are no longer in operation. CoinGecko employs a comprehensive set of criteria to classify a token as “dead.” These include no trading activity within the past 30 days, revelations of fraudulent activities or rug pulls, and voluntary deactivation requests by project teams.
It is noteworthy that the majority of these deceased digital assets made their debut during the 2020-2021 bull market frenzy. The 7,530 cryptocurrencies that now reside in the digital graveyard from this period represent a substantial 53.6% of the total tokens ever listed on CoinGecko. In contrast, during the preceding 2017-2018 bull market, just over 1,450 out of approximately 3,000 launched projects met their demise.
Factors Behind the High Failure Rates
CoinGecko suggests that the proliferation of defunct coins during the 2020-2021 period can be attributed to the relative ease of deploying tokens and the surge in popularity of memecoins. However, it is important to note that many memecoin projects lacked a tangible product, leading to their abandonment shortly after launch.
The research also highlights that cryptocurrencies launched in 2021 experienced the highest rate of failure, with a staggering 5,724 projects already defunct, marking it as the worst year for cryptocurrency launches. The subsequent year, 2022, witnessed a 60% crypto failure rate, with 3,520 projects going extinct. In stark contrast, 2023 has thus far shown a relatively low failure rate, with only 289 out of the over 4,000 cryptocurrencies listed during that year being deactivated, representing a failure rate of less than 10%.
Future Uncertainty
As we delve deeper into the cryptocurrency landscape, it remains uncertain whether the current lower failure rate will persist over time. The crypto market is known for its dynamic nature, where innovation and market sentiment can rapidly shift. Only time will tell whether the lessons learned from the past will lead to a more sustainable and resilient cryptocurrency ecosystem.
In this ever-evolving digital frontier, investors and enthusiasts alike must remain vigilant and discerning, as the cryptocurrency market continues to navigate its complex terrain.
