Why 86% of All Crypto Token Failures Occurred in 2025

The crypto market faced an unprecedented wave of token failures in 2025. According to CoinGecko data, more than 11.6 million tokens failed in a single year. This figure represents 86.3% of all crypto token failures since 2021.

The collapse in 2025 was the most severe in the industry's history. Over 53.2% of all cryptocurrencies tracked on GeckoTerminal are now inactive. Most of the failures occurred in the past two years, showing how token creation outpaced survival rates.

CoinGecko's data shows a structural breakdown in the token economy. The rapid creation of projects, especially meme coins, and heightened volatility contributed to the collapse. Market saturation and lack of liquidity were key factors in the mass failure of tokens.

Why Did This Happen?

The explosion in token creation led to a highly saturated market. Between 2021 and 2025, the number of listed crypto projects rose from 428,383 to nearly 20.2 million. This rapid growth, while indicative of increased accessibility to token creation, also contributed to severe market overcrowding.

Token failures were not evenly distributed across years. The annual breakdown shows a sharp rise in 2024 and 2025. The 11.6 million failures in 2025 were more than the combined total of all prior years. These failures were concentrated among tokens with little or no liquidity, making them highly vulnerable to volatility.

The October 10, 2025, liquidation event further accelerated the collapse. In a 24-hour period, $19 billion in leveraged positions was wiped out, marking the largest single-day deleveraging in crypto history. The shock exposed the fragility of thinly traded tokens.

How Did Markets React?

OTC markets in 2025 saw a significant shift in liquidity dynamics. Capital became more concentrated, with trading activity narrowing into a smaller set of large tokens. BTC and ETH drew most of the attention, with large volumes confined to a few major assets.

Institutional investors became more active in 2025. They began to prefer deliberate execution and structured liquidity strategies, moving away from speculative or directional trading. This trend signaled a more mature and disciplined market environment.

Retail investors also changed their behavior. The post-October 10 deleveraging event marked a turning point, with both retail and institutional investors rotating back into BTC and ETH. This shift suggested a defensive posture as market participants anticipated macroeconomic uncertainty.

Altcoin rallies in 2025 were shorter and less impactful. The average altcoin rally lasted 19 days, compared to 61 days in 2024. This indicates a drop in conviction and an increase in tactical risk-taking among traders.

What Are Analysts Watching Next?

Wintermute's data highlights a move toward structured and capital-efficient trading strategies. Derivatives activity, including CFDs and options, grew significantly in 2025. This trend reflects a shift toward more systematic and yield-focused strategies rather than simple directional bets.

Liquidity funnels such as ETFs and DATs played a major role in shaping capital flow. These structures channeled most of the inflow into major assets like BTC and ETH. As a result, broader market spillover into smaller tokens was limited.

The future of the crypto market in 2026 depends on whether liquidity broadens beyond large-cap assets. If ETFs and DATs expand their mandates to include more tokens, it could trigger a more balanced market. Alternatively, if concentration persists, the traditional four-year cycle may continue to fade.

Analysts are also watching for a potential return of retail interest in crypto. If retail investors shift back to the market, it could boost capital inflows and stabilize token prices. However, such a shift appears less likely based on current trends.

The structural changes observed in 2025 suggest a transition away from narrative-driven cycles. Investors must now pay closer attention to where liquidity enters the market and how it is deployed. These factors now play a larger role in determining performance than traditional cycles.