In January, the cryptocurrency market experienced an unprecedented surge in new token issuances, with over 600,000 tokens launched. This marks a 12-fold increase compared to the same period in the previous year, raising significant concerns over investor liquidity as noted by industry analysts.
Bobby Ong, co-founder of CoinGecko, shared insights on this trend, highlighting the substantial growth from around 50,000 new tokens per month during 2022-2023 to 400,000 in late 2024, with January 2025 hitting the remarkable 600,000. This explosion in token creation can be partially attributed to platforms like Pump.Fun, which have simplified the token creation process.
According to Gabriel Halm, a research analyst at IntoTheBlock, this phenomenon showcases the natural exuberance associated with a bullish crypto market. He pointed out that the proliferation of tokens dilutes investor liquidity and contributes to erratic price movements within the market.
Despite the burgeoning number of tokens, established altcoins are struggling to regain their 2021 highs due to liquidity fragmentation, a sentiment echoed by Ong. He suggested that the sheer volume of tokens is spreading trader attention too thinly, preventing significant altcoin price movements as seen in prior cycles.
Moreover, the involvement of traditional finance institutions is altering liquidity dynamics in the crypto market, further affecting capital flows. Halm noted that as these institutions enter the space, the liquidity rotations observed in previous cycles undergo transformation.
Ong predicts that, if the current trend continues, the crypto industry may see over a billion tokens within the next five years, adding further to liquidity concerns and potentially reshaping the future market landscape.
