REALITY CHECK | Millions of Crypto Tokens Are Vanishing as Liquidity Tightens, Say Analysts

Bitcoin may need a sweeping collapse of weaker crypto tokens before it can sustain a long-term bull market, according to crypto analyst Ben Cowen, who said the ongoing ‘purge’ of speculative digital assets could ultimately strengthen the broader market.

By early 2025, new platforms were allowing anyone to mint tokens with ease with approximately one million tokens being created each week at one point.

Cowen argued that millions of low-quality or inactive crypto tokens created during previous market cycles are now being washed out as liquidity tightens and investors shift capital toward larger, more established cryptocurrencies such as Bitcoin.

The analyst said previous crypto cycles were marked by excessive token creation, particularly during periods of easy monetary conditions and retail speculation, but warned that many of those assets lacked sustainable use cases or long-term investor demand.

According to Cowen, a healthier market structure would emerge if capital continues consolidating into major cryptocurrencies rather than being spread across thousands of smaller projects. He said such a reset could create conditions for a more sustainable bitcoin rally instead of short-lived speculative surges.

An estimated 38% of altcoins are now trading near their all-time lows, a level that analysts say is even worse than the conditions seen after the collapse of FTX in 2022.

According to CryptoQuant analyst, Darkfost, the current market environment is unfavorable for riskier assets, with cryptocurrencies – particularly smaller altcoins – absorbing much of the downside pressure.

According to Luke Nolan, a senior researcher at CoinShares, said token purges have ‘already largely happened’ when you look at the collapsing memecoin market which has moved from $150 billion to under $50 billion in just one year.

“Ninety-five percent of tokens being worthless is fair,” said Nolan.

The comments come as crypto markets continue recovering from a prolonged downturn that erased billions of dollars in market value and triggered the collapse or decline of numerous smaller tokens launched during the 2021–2024 boom years.

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