Despite the enormous crypto sector correction, developers appear unfazed in their efforts to bring new digital assets to market.
As of June 17, the number of cryptocurrencies entering the market had surpassed 20,000 for the first time, with a total of 19,911. According to CoinMarketCap data, the number of new cryptocurrencies increased by 3,674 or 22 percent in 2022 alone.
Despite the fact that the crypto market is only a decade old, the number of tokens has already outpaced publicly traded firms in the Americas by nearly twice.
The lack of clear regulations guiding the introduction of new crypto projects is to blame for this trend.
Crypto new tokens are being driven by a lack of clear restrictions
Individuals can issue tokens into the market without having to comply with the severe regulatory scrutiny imposed by bodies such as the Securities Exchange Commission in this sector.
Notably, after seeing tremendous growth in 2021, the number of new cryptocurrencies has accelerated in 2022, with assets such as Bitcoin reaching all-time highs. However, since the beginning of 2022, the sector has been in free fall, losing nearly 55% of its market capitalization.
The belief that the current bearish momentum will soon dissipate, with new ventures trying to profit from a prospective rally, is one of the driving causes for the crypto market’s expansion. In addition, most investors tend to put more money into different cryptocurrencies during a downturn, which could be motivating the launch of new tokens.
Emerging cryptocurrency regulations are likely to have an impact
The focus in the future will be on how cryptocurrency launches will be impacted, especially as additional jurisdictions pass new legislation to regulate the sector.
Furthermore, the lack of restrictions has encouraged criminal actors to exploit the market in order to profit from naive investors. The Terra (LUNA) fall, for example, has cast doubt on the crypto market’s viability. Notably, the token’s creator, Do Kwon, has come under fire for alleged fraud that contributed to the ecosystem’s demise.
In other cases, the new tokens aim to imitate well-known cryptocurrencies such as Bitcoin and Ethereum, which have a wide range of applications. Analysts, on the other hand, believe that as the industry matures, most of the new assets will be wiped out due to their lack of utility.
Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of EGG Finance. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.