- 72% of crypto projects have died since 2020, according to a report by Alphaquest and Storible.
- But bitcoin's latest rally may be helping the industry recover.
- On Friday, the cryptocurrency market capitalization hit a record high of $2.58 trillion.
Bitcoin The bounce could signal that good times are ahead for more than just the main token, possibly nullifying a free fall in the broader crypto community.
Since 2020, 72% of crypto projects have died, according to a report published by Alphaquest and Storible. Of more than 12,000 projects investigated, 8,854 were inoperative.
2023 was the most difficult stretch in the four-year period, accounting for 59.35% of dead coins. Immediately before the year came the demise of FTX, a crypto exchange whose sudden collapse sparked serious regulatory scrutiny. In fact, 32% of projects died after the FTX crash, Alphaquest found.
But this year he could finally turn the page.
Spot bitcoin ETFs, the first of their kind in the US, have reignited enthusiasm for the cryptosphere. Since its launch in January, bitcoin has risen more than 47%, reaching its all-time high on Wednesday.
Bullish expectations hold that it could rise to $100,000 by the end of the year. Tailwinds cited include more ETF inflows, the upcoming token halving, and more flexible interest rates. According to Standard Chartered analyst Geoff Kendrick, that means more attention for the industry as a whole:
"The rise of BTC lifts all boats in some ways," he told Business Insider via email. "In other words, it brings new money and new eyes to the industry, which is very helpful for everything related to cryptocurrencies."
What's more, the rise of the token offers more purchasing power to cryptocurrency investors. This is because bitcoin is often used as collateral for margin positions on exchanges, according to Alexander Kuptsikevich, senior market analyst at FxPro.
"Interest in altcoins is intensifying as Bitcoin and the largest cryptocurrencies increasingly retreat to all-time highs. The psychology is here as a long period of all-time highs and a fairly heavy asset makes you look for new ideas and increase your appetite for risk," he told BI.
CoinFund's head of liquid investments, Seth Ginns, shared a similar opinion, noting that investors will likely focus on projects in the early development phase:
"We are excited about key infrastructure investments, from Layer 1 to scaling solutions, the intersection of AI and cryptocurrency, gaming applications, and decentralized physical infrastructure, to name a few areas," he said via email.
On Friday, the cryptocurrency market hit a new record, with capitalization reaching $2.58 trillion, Kuptsikevich wrote in a market update. In particular, the gains were concentrated in altcoins: ethereal rose 2.9%, while BNB and dogecoin reached a maximum of 7%.
Still, bitcoin is likely to remain the main market driver through 2024. In fact, Kendrick suggested that the token's market share could increase, rising from around 50% to the 55%-60% range this year.
