In a recent report by CoinGecko, it has been revealed that a significant number of cryptocurrencies introduced during the peak of the 2020-2021 bull run have ceased active trading, marking a high mortality rate for these digital assets.
The report highlights that out of the over 24,000 cryptocurrencies listed on CoinGecko since 2014, 14,039 have met their demise. This trend reflects the challenges and uncertainties many cryptocurrency projects face, especially those launched during periods of exuberant market hype.
Rise and fall of Memecoins: A key factor in crypto
Many cryptocurrencies’ rise and subsequent fall can be attributed to the “Memecoins.” Memecoins are cryptocurrencies created as a playful joke or meme but gained traction in the crypto community. These coins often attracted attention due to their humorous or quirky branding, and investors flocked to them, hoping for quick and substantial gains.
The report identifies the prevalence of Memecoins as a significant contributing factor to the high failure rate of cryptocurrencies introduced during the 2020-2021 bull run. The hype surrounding these projects led to a proliferation of coins with limited utility and long-term viability. As a result, many Memecoins have faded into obscurity, leaving investors with little to show for their investments.
Among the various cohorts of cryptocurrency launches, those introduced in 2021 have shown the lowest success rate. As of January 2024, 5,724 cryptocurrencies launched in 2021 are no longer actively trading. This indicates a substantial failure rate for projects initiated during this period.
In contrast, cryptocurrencies launched in 2023 have demonstrated better resilience. Only 298 out of the coins launched in 2023 are no longer trading in January 2024. This represents a failure rate of less than 10%, suggesting that newer projects are better positioned to weather the challenges of the volatile crypto market.
Despite the high failure rate associated with Memecoins, investors continue to be drawn to them due to their potential for swift and substantial gains. While Memecoins may lack the fundamentals and use cases of more established cryptocurrencies, their meme-worthy nature and the allure of overnight success continue to attract risk-tolerant investors.
One of the most notable Memecoins, Dogecoin, is a prime example of the appeal and volatility of such assets. Dogecoin initially launched as a joke. It saw its price increase from trading at a fraction of a cent in 2013 to briefly reaching around $0.74 per coin in May 2021, providing early investors with over a 1000x return on their investment. At the time of publication, Dogecoin is trading at $0.08.
Elon Musk’s influence on Dogecoin
Much of the recent hype surrounding Dogecoin can be attributed to the influence of Tesla CEO Elon Musk. Musk has consistently mentioned Dogecoin in his social media posts and appearances, fueling speculation and price fluctuations. His endorsement of the meme-inspired cryptocurrency has contributed to its enduring popularity and occasional price surges.
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