The crypto market lost value by more than 50% in 2022, but the number of emerging digital currencies continues to grow to a new high.
As of June 26, the number of cryptocurrencies tracked by CoinMarketCap surpassed the 20,000 mark for the first time in history to stand at 20,002. Notably, by leveraging a web-based archiving tool, Finbold determined that in 2022, the market added 3,765 new cryptocurrencies, a growth of 23%.
Interestingly, despite the emergence of new tokens, Bitcoin still dominates the market, with the market capitalization of the flagship cryptocurrency accounting for 42%.
It can be perceived that new tokens joining the market are hoping to benefit from any eventual rally that may arise from the current correction.
The market should rebound
Although the market lost its capitalization of more than $2 trillion, most analysts maintained that the sector would recover while noting that the current environment is part of maturity.
Overall, the market has seen strong sales throughout 2022 amid glimpses of mild recoveries. On June 25, Finbold announced that the market had regained around 16% of its market capitalization, attracting more than $100 billion in capital inflows.
It should be noted that the survival of the 20,000 tokens will mainly depend on the specific utility of the crypto. There is a consensus that some digital assets will disappear as the crypto market matures.
The emergence of new assets is also accelerating the regulatory debate as authorities aim to protect investors. In this line, the founder of Cardano (ADA), Charles Hoskinson, recommended self-certification to regulate the growing market.
According to Hoskinson, authorities should adopt a similar model used by the US Internal Revenue Service (IRS) in managing cryptocurrencies.
Impact of lack of regulation
Moreover, the current lack of regulation is one of the main drivers for the emergence of cryptocurrencies. For example, launching cryptocurrencies on the market does not require a lengthy regulatory process similar to listing stocks.
Although some of the assets aim to mimic established cryptocurrencies like Bitcoin, new entrants are sometimes driven by fraudulent motives seeking to take advantage of scattered regulations. Notably, the market has been hit by several high-profile crypto scams, with the recent Terra (LUNA) crash standing out.