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5,000 new tokens have stood out in the last year, is that good for the sector?

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In the last year, a number of new cryptocurrencies have appeared. This development was partly motivated by institutional involvement in the space.

The boom of new cryptocurrencies in 2021, their number exceeded 12,000

During the period of great corporate and institutional interest in the cryptocurrency sector, according to available data, almost 5,000 new tokens have appeared in the last 12 months, an average of more than 10 new coins per day.

As can be seen on what is probably the best-known crypto market data platform, CoinMarketCap, the number of existing cryptocurrencies recently exceeded 12,000. This is a significant increase from about 7,100 coins recorded by the site in September last year, meaning that at least 4,900 new digital assets created.

This represents the largest year-on-year increase in the absolute number of cryptocurrencies since the formation of BTC. During this time, the digital assets sector reached a total market capitalization of over $ 2 trillion.

The interest in creating new cryptocurrencies is largely due to the price gains of BTC – which brings with it all other cryptocurrencies – over the last year and also to the growing interest of institutions in the cryptocurrency sector, whether in terms of support or investment itself.

As names like Elon Musk and Jack Dorsey support cryptocurrencies and highlight their potential, creative and financial interest in cryptocurrencies is growing. This further strengthens markets and inspires developers to work on their own cryptocurrencies in an effort to make potential profits.

In addition, digital assets have gained a lot of interest as an asset class to hedge against inflation – especially during the economic crisis caused by coronavirus pandemia. While stock markets plummeted in September 2020, cryptocurrencies recovered very quickly. This apparently inspired many creators to start investing and developing in the emerging asset class.

Is this a good thing for cryptocurrencies?

Due to the growing interest and technological development, which is crucial for the growth of the sector, new cryptocurrencies are constantly emerging. On the other hand, an ever-increasing number of coins can be counterproductive or even dangerous.

For example, SEC President Gary Gensler is more skeptical about the sector because of the large number of existing tokens. He says there is no room for thousands of different currencies and plans to further regulate the industry to protect investors before some inevitably collapse.

In fact, many of these tokens appear to be dangerous investments – if not outright frauds. However, due to the large number of inexperienced investors, they will find their supporters.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.
BlackRock (IBIT), the Grayscale Bitcoin Trust (GBTC), Fidelity (FBTC), Ark Invest/21Shares (ARKB), Bitwise (BITB), Franklin (EZBC), Invesco/Galaxy (BTCO), VanEck (HODL), Valkyrie (BRRR), WisdomTree (BTCW), Hashdex (DEFI)

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