A recent study conducted by CoinGecko has shed light on the high failure rate of cryptocurrencies, with more than 50% of all cryptocurrencies listed on the platform since 2014 meeting their demise.
Out of the 24,000+ cryptocurrencies listed on CoinGecko since 2014, a staggering 14,039 have been categorized as ‘dead’ or ‘failed.’
The study offers insights into the patterns of cryptocurrency failures over the years, revealing that a significant number of these failed digital assets can be linked to the 2020-2021 bull run.
During this period, a total of 7,530 cryptocurrencies met their demise, accounting for 53.6% of all failed assets on CoinGecko. Interestingly, the 2020-2021 bull run saw over 11,000 cryptocurrencies being listed on CoinGecko, and approximately 70% of them have since shut down.
Comparatively, the previous bull run (2017-2018) also had a high failure rate, with nearly 70% of the 3,000+ cryptocurrencies listed during that time shutting down.
The year 2021 stands out as particularly challenging for cryptocurrency projects, with 5,724 cryptocurrencies failing as of January 2024. This translates to a failure rate of over 70%, underscoring the difficulties faced by projects launched during that tumultuous year.
The surge in the number of failed coins during the 2020-2021 period can be attributed to the ease of deploying tokens and the rising popularity of meme coins. Many of these projects were launched without a tangible product, leading to abandonment after a brief period.
Projects launched in 2022 also faced challenges, with 3,520 out of approximately 5,800 listed cryptocurrencies having already failed, resulting in a failure rate of around 60%.
However, there is a glimmer of hope for cryptocurrencies listed in 2023, with only 289 out of over 4,000 meeting their demise, resulting in a significantly lower failure rate of less than 10%.
The report highlights several factors that can lead to the deactivation of cryptocurrencies on CoinGecko. Inactivity, defined as no trading activity within 30 days, is one such factor. Additionally, media coverage or credible reports exposing fraudulent projects or exit scams can also lead to deactivation.
Cryptocurrency projects may also consider deactivation when undergoing changes such as dissolution, rebranding, termination, or making tokens untradable or obsolete. These factors prompt projects to seek deactivation as they navigate through transformations and challenges.