Here's why over half of crypto projects are disappearing!

Every day, a multitude of crypto projects flood the market. A few of them manage to rise and carve out a place for themselves in this constantly evolving ecosystem. But the truth is, most never break through and end up disappearing as quickly as they emerged. At least, that’s what a recent study by CoinGecko shows. It indicates that in recent years, cryptos have experienced explosive growth leading to the market being inundated with thousands of new projects. The problem is that a large part doesn’t survive the dynamics of the sector. Why is that so? That’s what we’ll explore together in this article.

14,039 crypto projects have disappeared from the ecosystem since 2014

From 2014 to today, CoinGecko has closely monitored the emergence of new crypto projects. About 24,000 crypto initiatives have been launched during this period. But despite the sustained bloom of new crypto projects, the platform has come to a realization. At least 50% of these crypto initiatives are no longer operational. At least, that’s what the observation of these assets’ dynamics over the past 30 days shows. From an accounting point of view, that’s about 14,039 projects that have vanished into thin air, leaving behind a trail of unsuccessful crypto ventures. A clear sign of the particularly ferocious competition in this sector.

What is particularly striking is that the majority of these failed crypto projects appeared during the intense bullish cycle of 2020-2021. During this period, a staggering number of 7,530 cryptos launched bit the dust. This represents 53.6% of all failed projects listed by CoinGecko. The magnitude of the figures becomes poignant when considering that over 11,000 cryptos were listed during this bullish phase. This translates to a staggering failure rate of 70%.

The reality of these figures is also observed for crypto projects launched during the bullish period of 2017-2018. At least 1,450 of the crypto initiatives deployed out of the 3,000 listed during this period have also failed. A negative performance similar to that of the bullish phase of 2020-2021. It seems to be a constant that the majority of cryptos put on the market do not survive the harsh reality of fierce competition that prevails in this ecosystem. The question is, why is this the case.

Why such a carnage?

According to some analysts, it takes 15 months for most of the cryptos launched at a given time to no longer exist. In other words, the lifespan of a large majority of crypto projects is less than a year and a half! Several reasons can explain this state of affairs. Some of these causes are intrinsic, while others are extrinsic.

The extrinsic causes of the shipwreck of most crypto projects

If the majority of these crypto initiatives quickly fizzle out, it is firstly due to the fierce competition within the sector. Indeed, there are a multitude of initiatives offering similar products and services. This creates an extremely competitive environment in which newcomers cannot establish themselves without finding a way to stand out. Which is obviously extremely difficult.

The second extrinsic cause of the carnage of crypto projects is related to the frequent shocks of the market. A significant challenge is dealing with substantial market fluctuations in response to news and investors’ sentiments that very few initiatives manage to handle. Because it must be emphasized, these variances can jeopardize the stability of crypto projects, especially those relying on fundraising to ensure their growth.

In addition to these two causes of mortality of crypto projects, we must add regulation, still under development in many countries. This is a major obstacle to the development of crypto initiatives. All the more so because the absence of a specific regulatory framework for cryptos can make fundraising difficult, thus hindering their progression.

It should be noted that while these extrinsic causes greatly curb the development of these crypto projects, they could otherwise limit the damage by mastering the intrinsic causes of their failures.

The intrinsic causes of the death of the majority of crypto projects

The first intrinsic cause of mortality of crypto initiatives lies in the absence of a clear and viable economic model. Many projects are founded on particularly innovative ideas. But their inability to develop a strong economic model compromises their ability to generate sustainable revenue. Whereas the longevity of a crypto project often rests on its ability to fit into a relevant economic model.

Another crucial aspect in the survival of crypto projects: the presence of an experienced team. Indeed, the development of these projects requires sharp technical skills and solid project management experience. However, many projects are led by amateur teams who lack the necessary competencies to successfully carry out their initiatives. A situation that leads to insurmountable obstacles.

Finally, it becomes apparent that the sustainability of crypto projects requires the harmonious conjunction of the aforementioned elements. Namely, a robust economic model, an experienced team, an ability to face competition, resilience to market fluctuations. This, not forgetting effective adaptation to the sustained evolution of the crypto market’s regulation.

Conclusion

With the explosive growth of the crypto market, thousands of projects have emerged. But the CoinGecko study reveals that over half of these initiatives (14,039 out of 24,000 since 2014) have disappeared. The bullish period of 2020-2021 was particularly devastating with 53.6% of projects failing. This situation is due to several factors, including fierce competition, market fluctuations, and developing regulatory standards. To survive this trend, new crypto projects must master these elements. Without such mastery, they are doomed to the same fate.