The rapid growth in the number of crypto tokens is outpacing the value they generate, creating an “existential” problem for the industry, according to Michael Ippolito, co-founder of Blockworks.
In a series of <a href="https://x.com/MikeIppolito_/status/2040491259148767404" rel="noopener noreferrer nofollow">posts</a> on X, Ippolito noted that while total crypto market capitalization remains relatively strong, the average value per token tells a different story. “The average coin is only slightly higher than where it was in 2020 (!) and down ~50% since 2021,” he wrote.
Median token returns have also deteriorated sharply. Most tokens are down roughly 80% from their highs, suggesting that gains have been concentrated in a narrow set of large-cap assets, while the broader market underperforms, Ippolito claimed.
<figure><img src="https://s3.cointelegraph.com/uploads/2026-04/019d5d04-c71c-7ca0-885f-cd2c278904da.jfif" alt="‘Existential’ token problem seen as supply outpaces value creation: Blockworks exec">
 <figcaption>Media token returns drop. Source: <a href="https://x.com/MikeIppolito_/status/2040491294095720766" rel="noopener noreferrer nofollow">Michael Ippolito</a>
 </figcaption>
</figure>
He argued that the imbalance appears to be driven by a rapid expansion in token supply. “We created a TON of new assets and STILL total market cap is flat,” he wrote, adding that this dynamic effectively dilutes value across a growing pool of tokens.
Related: <a href="https://cointelegraph.com/markets/bitcoin-done-85percent-crashes-cathie-wood-34k-target" rel="noopener noreferrer nofollow">Bitcoin 'done' with 85% crashes, says Cathie Wood amid new $34K target</a>
<h2 id="token-prices-break-from-fundamentals">Token prices break from fundamentals</h2>
Ippolito also claimed that the relationship between fundamentals and price has weakened. In 2021, token prices closely tracked onchain revenue. Recent data shows that despite a resurgence in protocol revenues, prices have not followed, pointing to a disconnect between usage and investor returns.
He argued that this signals a loss of confidence in tokens as vehicles for capturing value. “The token problem is existential for this industry,” he said, adding that without stronger alignment between fundamentals and price, the sector risks losing its core appeal.
<figure><img src="https://s3.cointelegraph.com/uploads/2026-04/019d5d05-b1ab-78be-b91c-2b8da3ae8f10.jfif" alt="‘Existential’ token problem seen as supply outpaces value creation: Blockworks exec">
 <figcaption>Fundamentals vs price. Source: <a href="https://x.com/MikeIppolito_/status/2040491299682537674" rel="noopener noreferrer nofollow">Michael Ippolito</a>
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In a post on X, Arthur Cheong, founder and CEO of DeFiance Capital, <a href="https://x.com/arthur0x/status/2040686608995983500" rel="noopener noreferrer nofollow">said</a> he agrees “with the urgency to fix the current situation of tokens in the crypto industry,” warning that if the market continues to concentrate around a small set of assets like Bitcoin and Ether, the broader crypto ecosystem risks losing relevance.
Related: <a href="https://cointelegraph.com/markets/bitcoin-shorts-risk-2-5-billion-liquidation-72k-are-bears-in-danger" rel="noopener noreferrer nofollow">Bitcoin shorts risk $2.5 billion liquidation at $72K: Are bears in danger?</a>
<h2 id="capital-shifts-from-tokens-to-stocks">Capital shifts from tokens to stocks</h2>
Investor demand is increasingly <a href="https://cointelegraph.com/news/crypto-capital-rotates-from-tokens-to-stocks-as-new-launches-struggle-dwf" rel="noopener noreferrer nofollow">moving away from newly launched tokens</a> toward publicly listed crypto firms, as most token launches fail to hold value, February research from DWF Labs found. The report revealed that over 80% of projects trade below their token generation event (TGE) price, with typical declines of 50% to 70% within about three months.
The pattern appears structural rather than cyclical. According to DWF’s Andrei Grachev, most tokens peak within the first month before declining under sustained selling pressure. Factors such as airdrops and early investor unlocks add to the supply overhang, reinforcing downward price trends even for projects with active products or protocols.
Magazine: <a href="https://magazine.cointelegraph.com/bitcoin-7-years-upgrade-post-quantum-bip-360-co-author/" rel="noopener noreferrer nofollow">Bitcoin may take 7 years to upgrade to post-quantum — BIP-360 co-author</a>

‘Existential’ token problem seen as supply outpaces value creation: Blockworks exec

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