Over Half of Cryptocurrencies Launched Since 2021 Have Failed: What It Means for the Crypto Market

A recent report from CoinGecko, released in April 2025, has sent shockwaves through the crypto community: 52.7% of all cryptocurrencies launched since 2021 have failed. This staggering statistic underscores the high-risk, high-reward nature of the crypto industry, where innovation often comes with a steep price. With over 13,000 tokens classified as “dead” out of the 24,000+ tracked by CoinGecko, the data paints a sobering picture of the challenges facing new projects. But what does this mean for investors, developers, and the broader market? Let’s dive into the details of this phenomenon, explore its causes, and analyze the potential impacts on the crypto ecosystem as we head into the second half of 2025.

The Scale of Crypto Failures: A Closer Look

CoinGecko’s analysis defines a “failed” cryptocurrency as one that is either inactive (no trading activity for over 30 days), abandoned (no developer or community activity), or delisted from major exchanges. Since 2021, the crypto market has seen an explosion of new tokens, fueled by the DeFi boom, NFT craze, and meme coin mania. However, the data reveals a harsh reality:

• Total Tokens Launched: Over 24,000 cryptocurrencies have been introduced since 2021.
• Failed Tokens: Approximately 13,000 (52.7%) are now considered “dead,” with many failing within their first year.
• Peak Failure Periods: The highest failure rates coincided with market downturns, notably the 2022 bear market triggered by the Terra-Luna collapse and FTX bankruptcy, which wiped out countless projects.
• Common Causes: CoinGecko cites poor fundamentals, lack of utility, scams, and market saturation as key drivers. Posts on X also point to “rug pulls” and speculative hype as major culprits.

While established cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) remain resilient, newer tokens face intense competition and scrutiny. The report highlights that meme coins and low-utility projects are particularly vulnerable, with many failing to sustain community interest or deliver on promises.

Why Are So Many Cryptocurrencies Failing?

Several factors contribute to the high failure rate:

• Market Saturation: The influx of thousands of tokens since 2021 has created a crowded market, making it hard for new projects to stand out. Many lack unique value propositions, leading to rapid investor disinterest.
• Speculative Hype: The 2021 bull run fueled a wave of meme coins and speculative projects, often launched with minimal planning. When hype faded, these tokens crashed, as seen with projects like Squid Game Token.
• Scams and Rug Pulls: CoinGecko notes that a significant portion of failed tokens were outright scams or abandoned by developers after raising funds, eroding trust in new projects.
• Regulatory Pressures: Stricter regulations in regions like the EU (MiCA) and U.S. have increased compliance costs, squeezing out smaller projects unable to afford legal overhead.
• Bear Market Fallout: The 2022 crypto winter exposed weak projects, with declining prices and reduced liquidity forcing many to shut down. X posts from users like @CryptoWhiz lament the “ghost chains” left behind.

Despite the failures, the report offers a silver lining: surviving projects tend to be stronger, with better fundamentals and real-world utility, suggesting a maturing market.

Market Impacts: Navigating the Fallout

The high failure rate of recent cryptocurrencies could reshape the market in several ways, affecting investors, developers, and the broader ecosystem. Here are the key impacts to consider:

• Increased Investor Caution
  The 52.7% failure rate is a wake-up call for investors, highlighting the risks of chasing unproven tokens. Sentiment on X reflects growing skepticism, with users like @TokenHunter warning against “pump-and-dump” schemes. Investors are likely to prioritize projects with strong teams, audited code, and clear use cases, such as DeFi protocols or layer-2 solutions.
  • Impact: Reduced capital flow into speculative tokens, potentially stabilizing prices for established cryptocurrencies like BTC (up 1.3% to $72,450 on May 1, 2025) and ETH (up 0.8% to $3,420). However, this could stifle innovation by limiting funding for legitimate startups.
• Market Consolidation
  The failure of over half of new tokens signals a shakeout, where only the strongest projects survive. CoinGecko predicts a “flight to quality,” with market share concentrating among top cryptocurrencies and stablecoins like USDT and USDC. This mirrors trends in traditional markets, where bear cycles weed out weak players.
  • Impact: Increased dominance of major coins, with Bitcoin’s market cap share rising to 54% in Q1 2025. Smaller altcoins may struggle to compete, but niche projects with unique utility (e.g., AI tokens like FET, up 2.1%) could carve out space.
• Regulatory Scrutiny and Trust Issues
  The prevalence of scams and failed projects has caught the attention of regulators worldwide. In the U.S., the SEC is pushing for stricter oversight of token launches, while the EU’s MiCA framework has already forced some projects to exit. The CoinGecko report may amplify calls for investor protections, as seen in posts from @RegWatch urging “cleaner markets.”
  • Impact: Tighter regulations could raise barriers to entry, reducing the number of new token launches but improving market credibility. However, overregulation risks stifling innovation, particularly in DeFi and Web3.
• Shift in Developer Focus
  The high failure rate may deter developers from launching new tokens, pushing them toward building on established blockchains like Ethereum, Solana, or layer-2 networks. CoinGecko notes a 15% drop in new token launches in Q1 2025 compared to Q1 2024, signaling a more cautious approach.
  • Impact: Greater focus on dApps, interoperability, and infrastructure projects, potentially accelerating Web3 adoption. However, fewer token launches could reduce speculative trading opportunities, impacting exchange revenues.
• Impact on Market Sentiment and Volatility
  The CoinGecko report has sparked mixed reactions on X, with some users like @BullishBtc viewing it as a “healthy purge” and others like @CryptoSkeptic warning of eroded trust. The news could dampen retail enthusiasm, particularly for altcoins, which saw a 3–5% dip in trading volume post-report.
  • Impact: Short-term volatility in altcoin prices, with meme coins like DOGE and SHIB dropping 2–3% on April 30, 2025. Long-term, a focus on quality projects could restore confidence, driving sustainable growth.

Risks and Opportunities

The high failure rate presents both challenges and opportunities:

• Risks: Persistent distrust in new tokens could slow retail adoption, while regulatory crackdowns may limit market access. Failed projects also leave investors with worthless assets, potentially triggering lawsuits or redemptions.
• Opportunities: The shakeout favors high-quality projects, creating opportunities for investors to back fundamentally strong tokens. Developers can focus on solving real-world problems, such as cross-border payments or decentralized identity, to differentiate themselves.

What’s Next for Investors and Traders?

For those navigating the crypto market, the CoinGecko report offers critical lessons:

• Due Diligence: Research projects thoroughly, focusing on team credibility, tokenomics, and utility. Tools like CoinGecko and Messari can help assess project health.
• Portfolio Strategy: Diversify across established coins (BTC, ETH) and promising altcoins with real use cases, like Chainlink (LINK) or Polygon (MATIC). Avoid overhyped meme coins without fundamentals.
• Trading Opportunities: Monitor altcoin volatility for short-term trades, especially post-news dips. Stablecoins like USDT (stable at $1.00) offer a safe haven during uncertainty.
• Stay Informed: Follow X for real-time sentiment and track regulatory developments, as they’ll shape the market’s trajectory. The U.S.’s upcoming stablecoin rules in August 2025 are a key milestone.

Conclusion

The CoinGecko report revealing that 52.7% of cryptocurrencies launched since 2021 have failed is a stark reminder of the crypto market’s volatility and risks. While scams, hype, and market saturation have taken a toll, the data also signals a maturing industry where quality is beginning to trump quantity. For investors, this means prioritizing due diligence and focusing on projects with staying power.

For the market, it’s a chance to rebuild trust, streamline innovation, and pave the way for sustainable growth. As the crypto landscape evolves, staying informed and strategic will be key to thriving in this dynamic space.

What are your thoughts on the crypto failure rate? Share them in the comments below!