New coin surges 12 times: Analysts warn of liquidity crisis, altcoin season may be postponed

The issuance of new cryptocurrencies soared by 12 times, analysts warned investors that funds would dilute risks and market price volatility intensified.

The surge in new coins has caused liquidity concerns, and the altcoin season may be postponed

Data shows that the number of new cryptocurrencies added in January hit a record high, with more than 600,000, a 12-fold increase from the same period in 2024, causing analysts to worry about insufficient market liquidity. Bobby Ong, co-founder and COO of CoinGecko, pointed out that about 50,000 new tokens per month from 2022 to 2023, while 400,000 new tokens per month in the fourth quarter of 2024 have reached 400,000.

Ong believes that platforms that simplify token creation, such as Pump.Fun, have also contributed to this growth trend. Gabriel Halm, research analyst at IntoTheBlock, said the surge in token issuance reflects the bullish boom in the crypto market, but also distracts liquidity and investors, leading to intensified price volatility. Due to weak market liquidity, many mature altcoins have difficulty returning to their 2021 highs, and the altcoin season may be postponed as a result.

Institutional participation in changing the liquidity pattern of the crypto market

In previous bull markets, Bitcoin's rise usually drove Ethereum, which in turn drove the rise of altcoins and meme coins. However, Halm notes that the growing participation of institutional investors is changing this liquidity cycle pattern:

"With the exponential growth of the number of new crypto assets, the addition of traditional financial institutions will inevitably change the previous liquidity cycle model and reshape the flow of capital in the crypto field."

CoinGecko's Ong also emphasized the problem of liquidity fragmentation, believing that too many tokens distract investors' attention and limited liquidity, resulting in the lack of the large-scale altcoin rise in the previous bull market. He predicts that at the current rate, the number of cryptocurrencies may exceed 1 billion in five years.

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