Cryptocurrency exchange

 

Token Failures Surged, with 1 in 4 that have been Issued Since 2021 Died in Q1: CoinGecko

The Great Token Extinction Event

Remember the Wild West era of 2021-2023, where it appeared that everyone and their cousin were launching a token? Well, the chickens have come home to roost. Among the approximately 15,000 hopeful tokens that sprouted up during that wild bull run, a whopping 3,750 have since been relegated to the crypto graveyard: no trading, no volume, no signs of life.

“Let’s be honest, most of these smaller cap tokens never stood a chance,” says Marcus Chen, who tracks markets at CoinGecko. “They came out without sustainable tokenomics or any genuine world use case. When the market turned tough, there simply wasn’t enough liquidity or developer support to sustain them, and they went down like stones.”

Meanwhile, the Bitcoin news most recently hashad  a very different narrative. As these new entrants fight for survival, Bitcoin has been quietly establishing itself as the preferred store of value in the online world. It’s as if you are seeing an experienced marathon runner gradually getting ahead while sprinters around the track crumple. You can learn more about this institutional adoption in our report on Bitcoin’s institutional adoption in 2025.

Red Flags Everywhere

If you’re considering jumping into a fresh token release, you may want to do so with extreme care. The CoinGecko report gives a fairly easy-to-see picture of what’s commonly going wrong in doomed projects.

Most of the failed tokens only ever went live on decentralized exchanges and had teams behind pseudonyms or full anonymity. Many didn’t even have anything approximating a realistic technical roadmap and appeared more interested in directing tokens to founders than creating something of value. Perhaps most indicative, though, was how rapidly development ceased – GitHub accounts that went dark just a few months after launch, like abandoned building lots.

“We’re seeing investors become a lot more discerning,” says Dr. Sarah Williams of the Digital Economy Research Institute. “They’ve been burned too many times by flashy marketing and hype. What we’re seeing is just the market sorting itself out – projects that were only created to surf the 2021 hype wave are washing away with the tide.”

The Bitcoin Difference

While lesser tokens are doing a disappearing act of their own, Bitcoin has been proving precisely why it’s continued sitting atop the cryptocurrency hierarchy all along. With market dominance now riding above 55%, it’s obviously where investors run to escape when they seek digital asset security.

“I’ve been saying this for years – when things get unstable, there’s a flight to quality,” says Michael Terpin, the founder of Transform Group. “People who’ve lost their shirts on fashionable tokens are returning to Bitcoin with a new respect for its durability and inherent value proposition.”

Interestingly, Bitcoin’s increasing correlation with tech stocks has also attracted a whole new class of investor who views it less as magic internet money and more as a serious technology investment for the long term.

Regulators Enter

Let’s not act like the regulatory environment hasn’t had its role to play in this token bloodbath. Securities regulators across the globe have been closing down crypto token offerings with greater and greater enthusiasm, and many projects just weren’t constructed to weather this sort of scrutiny.

“The regulatory uncertainty has been completely devastating for smaller projects,” says cryptocurrency lawyer Daniel Rodriguez. “Without firm legal underpinnings and compliance procedures in place, these projects are being picked off one by one. It’s harsh but unavoidable.”

The SEC’s continuous game of whack-a-mole with token projects has fostered a climate in which only the most legally sound operations can feel safe, driving even more investors to regulated alternatives such as Bitcoin.

Growing Pains or Growing Up?

All the hype surrounding token failure is doom and gloom in many people’s books, yet actually, quite a few veterans in the sector view this more as a cleansing for the overall cryptocurrency ecosystem. 

“Let’s think about it as the immune system kicking in for crypto,” proposes researcher Emily Johnson from Messari. “We required this purging phase to kick out projects that weren’t doing actual value work. The rest will be improved for it.”

For the regular investor who is hoping to survive these turbulent seas, the latest Bitcoin news indicates quite a straightforward strategy – hold fast to proven projects that have endured past storms and not chase after the next “bright shiny object” that holds out the prospect of making you a millionaire overnight.

As we observe the market change, it appears we’ll witness fewer but more substantial token projects in the next cycle, ones that are based on real innovation and true business models and not on hype and FOMO. And throughout, Bitcoin will probably be the anchor upon which serious crypto portfolios are centered.