Internet Capital Markets Sector Faces 80% Trading Volume Decline

The Internet Capital Markets (ICM) sector is currently experiencing a significant decline in activity, raising concerns about its long-term viability. The trading volume on the Believe App has plummeted by 80% from its peak just last week. This sharp decline is accompanied by a 77% drop in the creation of new tokens, indicating a waning interest in the market.

Data from Dune Analytics reveals that the daily trading volume of ICM tokens has been on a continuous decline since reaching its peak of $729.3 million on May 14. By May 20, the trading volume had dropped to $143.6 million. Similarly, the number of newly created tokens per day has decreased from 4,977 on March 13 to 1,134 by May 20. Despite facilitating the creation of over 23,000 tokens to date, only 5.3% of these tokens have been activated, suggesting a lack of traction or interest from users.

This trend has drawn criticism from industry observers. Analyst Mars DeFi recently highlighted the erosion of user trust in ICMs, attributing the decline to an influx of “empty tokens” driven by the meme coin craze. He argued that the original vision of fostering valuable, product-driven projects has been undermined by low-effort launches with little substance. According to him, the era of the meme-driven market is fading, and the problem lies in the lack of substance or credibility needed to sustain long-term interest.

DYOR co-founder, Hitesh Malviya, had previously cautioned that the ICM narrative might only sustain momentum for four to six weeks. With the sector showing signs of exhaustion just one week after its peak, Malviya’s prediction may be materializing. However, not all developments point to a permanent downturn. Ben Pasternak, founder of Believe, recently announced the upcoming launch of the Believe API, which aims to make it easier for builders to create harmony between their product and coin. This development could attract more builders to the platform and spur a revival in token creation and trading volume by enabling developers to integrate better functionalities into their projects.

Base Network is also closely monitoring the ICM trend. Jesse Pollak, Head of Base and Coinbase Wallet, views the increasing token creation and the growth of decentralized applications as part of this emerging ICM trend. He emphasized Base’s role in supporting the crypto economy by providing infrastructure and tools for users and developers. Pollak stated that if the goal is to bring a billion people onchain, many more things will be tokenized, and Base provides both the infrastructure and tools to help make that easier for both consumers and builders to deploy tokens.

Despite these positive developments, challenges remain. If the ICM sector hopes to regain user confidence and sustain growth, it must shift its focus from speculative, meme-driven launches to projects with tangible utility. This shift is crucial for the sector to move forward and regain the trust of users and investors alike.