Crypto Faces Dot-Com Style Shakeout as Over 100 Projects Fold
The cryptocurrency industry is currently undergoing a significant shakeout, reminiscent of the dot-com era, with more than 100 projects reportedly shutting down, filing for bankruptcy, or vanishing in 2026, according to MoonPay President Keith Grossman.
Grossman, speaking on August 10, suggested that the current downturn is compelling crypto companies to confront a fundamental question: are they developing products that people genuinely need?
In a post on X, referencing a CoinDesk report, Grossman described himself as “a geriatric” by crypto standards. He noted his experience with market cycles, having joined WIRED in 2002 shortly after the dot-com crash and taking on his first leadership role there during the 2008 financial crisis.
“Companies fail, people lose jobs, careers change & confidence gets shaken,” Grossman wrote, observing that such challenging environments can prompt individuals to re-evaluate their motivations for building within the crypto space.
The trend of over 100 crypto initiatives ceasing operations or declaring bankruptcy this year spans a wide range of entities, including exchanges, wallets, decentralized finance (DeFi) projects, NFT marketplaces, and blockchain networks.
Grossman drew a parallel between the current situation and the dot-com collapse. He argued that the internet’s inability to sustain thousands of businesses did not signify a failure of the technology itself. Instead, it highlighted that merely being an “internet company” was insufficient for building a viable business. He sees a similar test emerging for the cryptocurrency sector.
“The question is no longer whether you can launch a token, create another chain, raise a large round or generate attention,” he stated. “It is simpler: Are you creating something people actually need?”
The veteran crypto figure also linked digital assets with artificial intelligence, characterizing AI as “scalable intelligence” and crypto as “scalable truth.” This framework, attributed to John D’Agostino, posits that blockchains can reduce the costs associated with establishing ownership, authenticity, and settlement.
This perspective led him to discuss tokenization, though he cautioned that placing an asset on a blockchain does not automatically confer value. According to Grossman, the technology must demonstrably improve the user experience to create meaningful value.
Several project closures underscore that high usage alone has not always translated into sustainable revenue. Tally, a governance platform utilized by over 500 protocols, announced its closure despite having processed more than $1 billion in payments. Similarly, Everclear shut down after reaching $500 million in monthly transaction volume.
Exchanges have also felt this pressure. As reported last month, BitMart and BitMEX have begun winding down their trading operations. BitMart’s BMX token saw a decline of over 60% following the announcement. Movement Labs filed for Chapter 11 bankruptcy protection on July 23, causing its MOVE token to fall more than 99% from its previous all-time high.
For Grossman, these failures do not indicate a fundamental failure of cryptocurrency. Instead, they serve as a test of whether individual projects possess a product, customers, and a business model capable of weathering the disappearance of readily available capital.
“Putting something on a blockchain does not make it valuable,” he wrote. “The technology has to earn its place. And so do we.”
Leave a Reply