A staggering 72% of cryptocurrency ventures have perished since the onset of 2020, according to insights from Alphaquest and Storible.
However, the recent surge in Bitcoin’s value might be breathing new life into the sector.
This past Friday witnessed a historic peak in crypto market capitalization, soaring to $2.58 trillion.
The resurgence of Bitcoin could herald prosperous times not only for this leading digital currency but also for the wider crypto community, potentially reversing a downturn that has plagued numerous projects.
Since the year 2020, a report by Alphaquest and Storible reveals that a vast majority, 72%, of cryptocurrency initiatives have fizzled out. Among over 12,000 projects scrutinized, 8,854 were declared inactive.
The year 2023 proved to be the most challenging period within this four-year span, with 59.35% of cryptocurrencies meeting their demise. This downturn closely followed the collapse of FTX, a cryptocurrency exchange whose abrupt failure triggered intense regulatory scrutiny. Remarkably, 32% of projects ceased to exist following the downfall of FTX, as discovered by Alphaquest.
Nonetheless, the current year might mark a turning point.
The introduction of spot Bitcoin ETFs in the United States has rekindled enthusiasm within the crypto realm. Since their debut in January, Bitcoin has experienced a remarkable surge of over 47%, reaching its all-time high on Wednesday.
Optimistic forecasts suggest that its value could climb to $100,000 by the end of the year. Factors contributing to this potential rise include increased ETF inflows, the forthcoming halving of the token, and more relaxed interest rates. Geoff Kendrick, an analyst at Standard Chartered, believes this could attract greater attention to the entire industry:
- „An increase in BTC value has a ripple effect, boosting the entire sector,“ he explained to Business Insider via email. „In essence, it draws fresh capital and attention to the crypto world, which is immensely beneficial for all related aspects.“
Furthermore, the ascent of Bitcoin enhances the purchasing power of crypto investors. This is significant as Bitcoin often serves as collateral for margin positions on trading platforms, as noted by Alexander Kuptsikevich, a senior market analyst at FxPro.
„The allure of altcoins is intensifying as Bitcoin and other major cryptocurrencies steadily approach their all-time highs. This dynamic triggers a psychological response, prompting investors to seek out new opportunities and embrace greater risks,“ he shared with BI.
Seth Ginns, Head of Liquid Investments at CoinFund, echoed this sentiment, emphasizing a focus on early-stage projects:
- „We’re excited about pivotal infrastructure investments ranging from layer-1 solutions to scaling technologies, the convergence of AI and crypto, gaming applications, and decentralized physical infrastructure, among other areas,“ he expressed via email.
On Friday, the crypto market reached a new zenith, with its capitalization hitting $2.58 trillion, as reported by Kuptsikevich in a market update. Notably, the gains were predominantly seen in altcoins: Ethereum surged by 2.9%, while BNB and Dogecoin experienced spikes of up to 7%.
Nonetheless, Bitcoin is expected to remain the primary driving force in the market through 2024. In fact, Kendrick predicts that the token’s market share could increase, potentially rising from around 50% to the 55%-60% range this year.
