Over 50% of Cryptocurrencies Listed on CoinGecko Have Failed
A recent study conducted by CoinGecko has found that more than half of the cryptocurrencies listed on the platform since 2014 have failed. Out of the 24,000+ cryptocurrencies listed, a staggering 14,039 have been classified as ‘dead’ or ‘failed’.
Most Dead Coins Originated from the 2020-2021 Bull Run
The study reveals that the majority of these failed cryptocurrencies were launched during the 2020-2021 bull run. During this period, a total of 7,530 cryptocurrencies failed, accounting for 53.6% of all unsuccessful assets on CoinGecko. It is worth noting that around 70% of the 11,000 cryptocurrencies listed during this bull run have shut down since then.
In comparison, the previous bull run from 2017 to 2018 also witnessed a high failure rate, with approximately 70% of the listed cryptocurrencies shutting down. However, the year 2021 stands out as particularly challenging, with 5,724 cryptocurrencies failing. This represents a failure rate of over 70% and highlights the difficulties faced by projects launched during that tumultuous year.
Rise in Dead Coins Linked to Ease of Deployment and Meme Coins
The surge in failed cryptocurrencies during the 2020-2021 period can be attributed to two main factors: the ease of deploying tokens and the popularity of meme coins. Many projects were launched without a tangible product or clear purpose, leading to abandonment after a short period.
The situation does not improve for projects launched in 2022, as around 60% of the approximately 5,800 listed cryptocurrencies have already failed. However, there is some hope for tokens listed in 2023, with less than 10% of them meeting their demise.
Factors Leading to Deactivation
According to the study, several factors can render cryptocurrencies inactive on CoinGecko. Inactivity, defined as no trading activity within 30 days, is one such factor that can lead to deactivation. Additionally, media coverage or credible reports exposing fraudulent activities or exit scams can also result in the deactivation of projects.
Furthermore, cryptocurrency projects may choose to deactivate if the project team decides to dissolve, rebrand, terminate, or make tokens untradable or obsolete due to changes in their strategy or direction.
Hot Take: The High Failure Rate of Cryptocurrencies Raises Concerns
The high failure rate of cryptocurrencies listed on CoinGecko raises concerns about the sustainability and viability of many projects in the crypto space. The ease of token deployment and the speculative nature of meme coins have contributed to a significant number of failed projects. It is crucial for investors and users to conduct thorough research and due diligence before engaging with any cryptocurrency project. The decline in failure rates for tokens listed in 2023 suggests that there may be improvements in project quality and investor awareness. However, caution is still advised when navigating the volatile world of cryptocurrencies.
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