More than 12,100 cryptocurrencies have periods of no trading volume amid 2022's bear market, according to data provider Nomics.
More than 12,000 cryptocurrencies have recorded no trading volume this year, according to data by Nomics. The reason for this is the ongoing bear market that makes it very difficult for crypto projects to stay afloat as they lose funding.
Crypto Winter Turns 12,100 Digital Assets into Lifeless Assets
A new market research report by Nomics shows how cold the current crypto winter is. The crypto data provider found that throughout 2022, over 12,100 crypto tokens have had no trading volume for at least one month. Bloomberg described these tokens as “zombies” as they’re not “dead technically” though “not quite alive either.”
The number of new tokens increased sharply following 2021’s bull run, which sent Bitcoin and other cryptocurrencies to new all-time highs. Numerous crypto projects were boosted by the positive market sentiment at the time, hoping to cash in on the strong demand.
But 2022 has been positive for the crypto space as rampant inflation and a challenging macroeconomic environment drove investors away from cryptocurrencies and other high-risk investments. Furthermore, the collapse of Terra-LUNA and multiple crypto firms such as Celsius Network and Voyager Digital exacerbated the sell-off and weighed on crypto funding. Jacob Joseph, a research analyst at CryptoCompare, said,
“During the bull market of 2021, there was plenty of money, attention, and liquidity for new and existing projects. However, in the ongoing bear market, even good projects with utility will struggle to sustain their operations as they lose access to capital and funding.”
2022’s Cryptocurrencies With No Trading Volume Are Higher Than All Previous Years Combined
The number of cryptocurrencies with one month or more of no trading volume is twice as many in all previous years combined, per Nomics. In 2018, when the crypto market was significantly smaller than today's, 136 tokens had no trading volume. This figure increased to 766 in 2019, though still a far cry from 2022’s figure.
Moreover, Nomics found that out of about 64,400 assets it tracks, just 13,800 tokens registered some trading volume in a recent 24-hour period last week, according to Nick Gauthier, co-founder of Nomics. Also, there are several coins with very low trading volumes, such as the Terra Classic.
Because of such an environment, many new crypto startups have adopted a much more risk-averse approach, holding more widely adopted crypto assets like Ether or cash as a backup. Gauthier believes
“Crypto projects will need to ensure they’re ready for the lows as much as they want to ride the highs.”