Last year’s crypto winter proved to be the most severe in recent memory, with almost 60% of cryptocurrencies listed on CoinMarketCap perishing, according to a comprehensive study by AlphaQuest. This massive decline could signal a market self-correction, potentially setting the stage for a future rally.

Insights from the Research

AlphaQuest’s investigation covered a staggering 12,343 crypto projects, revealing a startling attrition rate. Over 8,850 projects have become inactive, indicating that 2023 was a brutal year for the crypto market.

Why Did These Cryptocurrencies Fail?

The primary causes of failure among these digital currencies were low liquidity and reduced trading volume, suggesting a significant drop in investor interest. A majority of these projects also stopped updating their websites and social media accounts, with nearly half being delisted from CoinMarketCap.

The Impact of Social Media

AlphaQuest’s report highlights the importance of social media activity as a barometer for a project’s health. With over a third of the defunct coins showing no social media activity, it’s clear that community engagement plays a crucial role in the cryptocurrency ecosystem.

The Fate of Post-Bull Run Projects

Projects that launched during the 2020-2021 bull run were hit hardest, with 70% now defunct. The collapse of FTX played a role in this downturn, with a significant number of these projects going inactive in its aftermath. The sectors most affected were those related to video and music, along with asset-backed stablecoins.