The cryptocurrency industry has witnessed the influx of thousands of new crypto coins created daily ever since the recent crypto boom.
While some of these new coins have great potential for growth and impressive use cases, a majority of them have little to no value to offer.
A Shitcoin Festival?
According to data from CoinMarketCap and CoinGecko, two of the world’s largest crypto price-tracking websites, almost 5,000 new coins have been created within the space of 12 months.
On September 27, 2020, CoinMarketCap recorded a total of 7,100 coins on its website while Coingecko kept track of about 5,908 coins.
Fast forward to 12 months later and both websites have a total of 12,000 and 9,413 coins respectively, indicating that about 4,900 new coins have been created within the past year.
Interestingly, during the last 12 months, the cryptocurrency industry went from a market cap of $3.5 billion to become a whopping $2 trillion industry.
Institutional Interest: A Major Factor
While several other factors might have spurred this increased interest in crypto creation, the influx of large institutional investors into the space is a major factor.
With the likes of Elon Musk, Visa, Mastercard, Jack Dorsey, MicroStrategy, and many multinational corporations showing their support for the cryptocurrency industry, especially bitcoin, other developers were spurred to jump on their different crypto projects.
The rise of meme-inspired coins like DOGE, which garnered a lot of attention, also led to the creation of thousands of meme tokens that are saturating the market.
Additionally, the status of cryptocurrencies, like bitcoin, as a reliable store of value, which was proven during the intense global lockdown, had motivated several developers to become a part of this rapidly growing industry.
Bitcoin’s Dominance Steadily Declines
With the creation of new cryptocurrencies, Bitcoin dominance, which is the measure of bitcoin’s market cap relative to the market cap of the rest of the crypto industry, is steadily declining.
About 12 months ago, bitcoin was dominating the entire crypto market by more than half, about 57.6%. Currently, though, the Bitcoin dominance has dropped significantly to about 42.3%.
The increase in the number of altcoins in the market is gradually driving the attention of investors away from bitcoin to new projects that can evolve finance in the coming years.
