In the crypto industry, the failure of a project is not uncommon, and today I will tell you about five cases of cryptocurrency collapse.
According to CoinGecko, last week at least five promising assets reached a devaluation of more than 90% compared to their ATH.
Interestingly, some of the best assets in terms of market capitalization almost made the list: Dogecoin (DOGE) lost 88.7% of its ATH, Uniswap (UNI) lost 88.5%, and Ripple (XRP) lost 88.3%.
Internet Computer (ICP)
The Internet Computer (ICP) token used to be worth $700 and is now valued at $7.5 - down more than 98.9% from its all-time high.
ICP is the token of the Dfinity Foundation, a Swiss nonprofit organization that aims to create a decentralized and scalable blockchain in the cloud to store data and support applications. It was launched in 2021 (development began in 2016) and immediately gained tremendous momentum. In less than four days, the token reached the level of the eighth largest cryptocurrency in the world.
The Dfinity Foundation is led by enthusiastic entrepreneur Dominic Williams, and its goal is to create a public Internet free from the influence of big tech companies like Google, Facebook or Amazon.
But why did the ICP token drop so much?
It's simple, the fact that the token was released during a bull market pushed the initial valuation into the upper range of expectations, but with prices retreating throughout the industry, the touted were among those who got the most.
Filecoin (FIL)
The Filecoin token (FIL) reached an all-time high of $236.84 on April 1, 2021. It currently stands at $7.33, down 96.9% from ATH.
When Filecoin was launched in 2017, it raised a record $257 million during an ICO. ICO stands for "Initial coin offering," or in Russian, "initial coin offering," which means the period during which a project collects investment before launching. Filecoin received even more capital than Tezos, which raised $232 million during its ICO.
Among the investors in Filecoin were giants such as Sequoia Capital, Andreessen Horowitz and Union Square Ventures.
Filecoin was launched to create a decentralized digital storage network through which users could efficiently rent out free space on their hard drives and receive Filecoin tokens as payment.
Filecoin began to collapse as investors realized that it might be overvalued in the long run. The mass opening of short positions is what led to the collapse of this token.
EOS.IO (EOS)
EOS peaked at $22.71 on April 29, 2018. Currently, the token is worth $1.27 - the coin has lost 94.4% from ATH.
The company's blockchain project Block.one was one of the first "Ethereum killers" and raised $4.2 billion during its ICO. After several test versions, the token was officially launched in June 2018.
Those who backed the project were British hedge fund manager Alan Howard, Moore Capital Management CEO Louis Bacon, and PayPal and Palantir co-founder Peter Thiel, among others.
However, investors' joyous sentiments didn't last long. In September 2019, Block.one had to pay a $24 million fine to the U.S. Securities and Exchange Commission (SEC) related to the ICO. And last June, the company agreed to pay investors $27.5 million in a class action lawsuit related to the same ICO project. This year, the company faced a $4 million lawsuit threatened by the community, and that's what caused the entire collapse.
LooksRare (LOOKS)
LooksRare (LOOKS), the LooksRare NFT marketplace token of the same name, reached its all-time high of $7.10 on January 20 of this year. However, it is now valued at just $0.447, down 93.6% from its record high.
LooksRare came out of nowhere in the first month of the year to become the biggest competitor to OpenSea, the main NFT market in the industry. However, even at the time, some investors were expressing doubts about the astronomical volumes that were supposed to come from this platform.
In fact, the platform was involved in wash trading, the essence of which is that users buy and sell NFT between their own wallets. This creates the illusion that the platform handles large volumes.
On Jan. 31, analyst firm CryptoSlam announced that it had identified more than $8.3 billion in vault trading deals involving LooksRare. This ultimately led to the depreciation of the token.
DYDX (dYdX)
The cryptocurrency dYdX is a token of the decentralized exchange of the same name. It was worth $27.86 at its peak and is currently hovering around $1.8, down 93.5% from its record high.
The establishment of the ATH token occurred in September 2021 and was due in part to the policy of banning cryptocurrencies in China. At that time, trading volume on the stock exchange continued to increase and surpassed the $10 billion mark.
The trading volume of dYdX increased dramatically, reflecting the Chinese government's actions toward the cryptocurrency sector. China suggested that any person or company that allowed digital assets to be traded in that country was breaking the law.
Tougher restrictions meant that many cryptocurrency companies, including centralized exchanges, had to cut back and eventually stop providing crypto services to the Chinese. As a result, this group of customers began looking for alternative solutions in the market, such as dYdX.
dYdX is a decentralized exchange. This means that it does not store user funds. Transactions are made using Ethereum-based smart contracts. To avoid high gas costs on the core network, dYdX uses StarkWare's layer 2 solution.
The token was dealt a serious blow this April when Binance removed the dYdX currency pair and Ethereum from its platform.
Keep your nose to the wind and know that Fortune, Fortune and Success always favor you when you are with us!
Always yours C.J.
All of the above is not financial advice, but only the subjective opinion of the author. If you doubt something, do your own research and double-check the information yourself.
