The cryptocurrency market appears healthy at first glance. Total market capitalization remains relatively stable, giving the impression that the industry is holding up well. But a deeper look reveals a very different story.
According to Michael Ippolito, founder of Blockworks, the number of tokens is growing much faster than the value they generate. His analysis, shared on X, highlights a structural issue that could reshape how the market functions.
If you remove Bitcoin and Ethereum from the equation, the broader crypto market looks far weaker. In fact, it has largely returned to levels seen several years ago.
This reveals a key dynamic. Market capitalization is not just about price, it also depends on supply. And right now, supply is expanding rapidly.
A Flood Of Tokens Is Changing The Rules
The number of new tokens entering the market has surged in recent years. Creating digital assets has become easier than ever, leading to a constant stream of new projects.
Why More Tokens Doesn’t Mean More Value
Despite this growth, overall market capitalization has not increased at the same pace. This suggests that new tokens are spreading value thinner rather than creating new value.
The data shows a clear pattern:
- The average token is only slightly above its 2020 price level
- Since 2021, it has lost around 50% of its value
- Median token performance is down roughly 80% from peak levels
This means that while the number of assets grows, the average performance continues to decline.
The Growing Gap Between Price And Real Activity
One of the most important changes in the market is the disconnect between token prices and actual blockchain activity.
In 2021, prices and revenues from blockchain projects moved closely together. As usage increased, so did token value. That relationship helped justify valuations.
By 2025, that link has weakened. Blockchain revenues have continued to grow, but token prices have not followed. This suggests that investors are no longer treating tokens as direct representations of underlying activity.
For many participants, tokens were the main reason to enter the crypto space. They offered access to early-stage opportunities and new financial systems. If tokens lose that connection to value, the role of the industry itself could shift.
Instead of being a new financial ecosystem, crypto risks becoming a technical backbone for traditional finance.
A Familiar Pattern With New Consequences
From a broader perspective, this is not entirely new. The market experienced a similar surge in token creation during the ICO boom of 2017-2018. Back then, many projects launched with limited utility, leading to oversupply.
Today, the same pattern is repeating, but at a larger scale. The infrastructure has improved, making it easier and faster to launch tokens than ever before.
The key difference now is awareness. Investors are beginning to recognize the impact of dilution on long-term returns. When supply grows faster than real usage, even strong revenue growth cannot fully support prices.
What Happens Next
The crypto market is now entering a phase of experimentation. Different models for value distribution, token utility, and economic design are being tested.
Some may fail. Others could redefine how value is created and captured in digital ecosystems.
But one thing is becoming clear: growth alone is no longer enough. What matters now is how that growth translates into real, sustainable value.