The crypto market boom has not only caused growing adoption from both retail and institutional sectors, but it has also seen a massive entry of new cryptocurrencies. Over the past year, many new cryptocurrencies have flocked the market to tap into the growth of this sector.
One of the main factors that have fuelled adoption in this sector is the entry of institutional clients. Due to this, over 5000 cryptocurrencies have entered the market over the last year. This is equivalent to 12 new tokens entering the market each day.
Major Crypto Boom
Data from CoinMarketCap shows that the number of new cryptocurrencies in the market is more than 12,000. In September last year, the analytics site had placed the number of new cryptocurrencies at 7100 coins. This shows that in one year, around 4900 coins have been introduced in the market.
The number of new cryptocurrencies in the market is the largest since Bitcoin was launched in 2009. The entry of new tokens in the market has been beneficial to the broader market, as, during this time, the market capitalization went beyond $2 trillion.
One factor that has triggered the creation of new cryptocurrencies is the massive gains that Bitcoins has reported over the past year. The entry of renowned investors such as Mark Cuban, Elon Musk and Jack Dorsey to the crypto sphere has also supported the sector’s growth.
Following this growth, developers have been rushing to create new tokens out of the fear of missing out on the gains and the growing demand for cryptocurrencies and blockchain projects.
Cryptocurrencies have also become common in being used by those who want to hedge against inflation. Those from countries such as Argentina, Iran and Venezuela have been shifting towards cryptocurrencies to evade the loss caused by the depreciating values of the countries’ fiat.
Despite the entry of new cryptos in the sector boosting the crypto market cap, there are instances where this might not be good. The entry of new coins in this sector could be dangerous because it could motivate the entry of scam coins.
The Securities and Exchange Commission chair, Gary Gensler, has shown scepticism of this sector because of the number of new tokens joining the market. To protect investors from scam coins, Gensler plans to introduce more regulations to the sector.
Most new cryptocurrencies are rug pulls that wait for new investors to pile money before the projects are shut down, leaving investors to count losses.
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