As the cryptocurrency market matures, the number of new tokens joining the industry is also surging.
Data provided to Finbold by cryptocurrency trading simulator Crypto Parrot indicates that about 13 new digital currencies have been created daily between September 2020 and September 2021. During the period, new 4,908 cryptocurrencies have launched, bringing the total number of coins to12,046.
The data further indicates that over the last 12 months, the number of new cryptocurrencies hitting the market has grown 68.75% from September 2020’s figure of 7,138.
The highest growth rate in new coins was between September 2019 and September 2020 at 146.98%, with the coins jumping from 2,890 to 7,138.
Several factors have contributed to the growth in the number of cryptocurrencies in recent months. However, the growing value of the sector is potentially the main contributor.
Over the last 12 months, the cryptocurrency sector led by Bitcoin has surged in value, with the asset hitting a new all-time high of 64,800 in April.
The entire industry even attained a cumulative market cap of $2 trillion at some point. Therefore, more creators sought to leverage the growth to introduce new tokens into the market.
At the same time, the sector has provided an opportunity for new creators with the push towards the mainstream. The industry has recorded an influx of institutional investors; also an indicator the industry is maturing.
Notably, new assets emerged amid the coronavirus pandemic that saw digital currencies earn consideration as a cushion against economic turmoil. Generally, the crypto markets remained resilient as stocks crashed at some point. The potential to drive the economy possibly caused the emergence of new coins.
Role of utility tokens
At the center of the growth, utility cryptocurrencies like Ethereum cannot be ignored. Such tokens develop as infrastructure, allowing other cryptocurrencies to be built on top of their networks, making it easier for new coins to join the market.
The role of utility cryptocurrencies has also taken center stage in the last 12 months with the growth of Decentralized Finance. Amid the DeFi boom, new projects have come to life, with their native utility tokens establishing on platforms like Ethereum.
Despite a significant number of cryptocurrencies emerging, not all turn out to have good intentions. Amid the recent rally, some projects are intending to scam unsuspecting users.
Additionally, digital currencies might not succeed as some are shunned by the public and end up fading.