According to Michael Ippolito, co-founder of Blockworks, the rapid growth of crypto tokens is outpacing the value they generate, creating an “existential” problem for the industry.
In the series posts on X Ippolito noted that while the total cryptocurrency market capitalization remains relatively high, the average value per token tells a different story. “The average coin is only slightly higher than in 2020 (!) and is down ~50% from 2021.” – he wrote.
Median token returns have also declined sharply. Most tokens are down about 80% from their highs, suggesting gains have been concentrated in a narrow set of large-cap assets while the broader market is underperforming, Ippolito says.
He argued that the imbalance appears to be due to the rapid boost in token supply. “We have created a TON of new assets and STILL’s total market cap is flat,” he wrote, adding that this animated effectively dilutes the value in the growing token pool.
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Token prices are breaking away from fundamentals
Ippolito also said that the link between fundamentals and price has weakened. In 2021, token prices closely followed network revenues. Recent data shows that despite protocol revenues rising again, prices have not followed suit, pointing to a disconnect between usage and investor returns.
He argued that this signals a loss of trust in tokens as tools for capturing value. “In the case of this industry, the symbolic problem is of an existential nature,” he said, adding that without a stronger adjustment of fundamentals to price, the sector may lose its basic attractiveness.
In a post on X, Arthur Cheong, founder and CEO of DeFiance Capital: he said Agrees “on the urgent need to fix the current token situation in the crypto industry,” warning that if the market continues to center around a compact set of assets such as Bitcoin and Ether, the broader crypto ecosystem could become less essential.
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Capital moves from tokens to shares
As a February study by DWF Labs showed, investor demand is increasingly shifting away from newly launched tokens towards publicly traded crypto companies as most token launches fail to retain value. The report revealed that over 80% of projects are trading below the token generation price (TGE), with typical losses of 50-70% over approximately three months.
This pattern is structural rather than cyclical. According to DWF’s Andrea Grachev, most tokens peak within the first month before degenerating under sustained selling pressure. Factors such as airdrops and early investor unlocking boost the supply overhang, amplifying downward price trends even for projects with energetic products or protocols.
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