The crypto market is certainly no stranger to market crashes. Since 2009, when Bitcoin first came into existence, the market has had three or four major crashes. Its volatility is infamous, but no one was likely expecting the scale of the crash.
With the market losing close to $2 trillion, the sheer magnitude of losses that the market is astronomical. In fact, the effect that this has had on various cryptocurrencies still remains unknown, until now. While most of the market tries to push forward, many haven’t gotten the chance to look back at all of the other cryptocurrencies lost.
According to various reports, over 12,000 cryptocurrencies are no longer being traded. Although these different coins are still on various exchanges, no one is necessarily trading them, which is why experts fail to classify them as alive either.
Why did so many cryptocurrencies turn into zombies
It would be accurate to classify these different cryptocurrencies as zombies since they’re neither dead nor alive. But to understand just how cryptocurrencies got into this position, it is worth looking into how most blockchains function and why so many cryptocurrencies can be left in this strange limbo.
Digital coins usually act as the face of most blockchain projects, but also act as the main way that they are able to compensate developers and the team involved in the project. These coins also entice developers to continue to be part of the project, as they can earn a major profit as the price for the coin goes higher.
Therefore, in the last year, plenty of startups founded their unique tokens to better support their projects. And because it was a bullish market at the time, the market could absorb all of them while still driving prices higher.
How this year changed everything
While the market did remain stable and was steadily growing, that would only last so long. As macroeconomic conditions worldwide shifted, the priorities of investors changed. Suddenly they no longer wanted to invest in high-risk assets like cryptocurrencies, which is when most investors started pulling out of the market.
With investors pulling out left, right, and center, the total market cap of the market nosedived. With prices spiraling down, it further turned away investors.
The fall of Terra and other Dominos
Along with people pulling out of the market, the Celsius Network crypto firm and Three Arrows Capital shutting down left the market in a pretty bad shape. And the final piece to fall was the implosion of Terra, which cooled off most future investments.
While some of the major coins still managed to find some form of support after falling, most of the tokens that are now zombies were not so lucky.