The study tracked the largest altcoins by market capitalization on November 10, 2021, near the peak of the crypto market, excluding Bitcoin, stablecoins and wrapped tokens. Nearly five years later, only seven were worth more than they had been at the start of the period.
For investors who selected tokens based on their technology, development teams and potential applications, the results challenge familiar investment advice: do your own research, look for strong fundamentals and hold through downturns.
So what should investors evaluate when buying digital assets, given that even projects with promising technologies can lose nearly all their value?
When Technology Doesn’t Translate Into Investment Returns
There are historical parallels between technological progress and disappointing investment returns. During the dot-com boom, investors poured money into telecommunications companies building fiber-optic networks. The infrastructure helped shape the modern internet, yet some of its biggest builders went bankrupt.
Crypto investing introduces an additional complication: the relationship between a network’s success and the value of its token. In traditional equity investing, shareholders own a legal interest in a company. Its success can eventually benefit them through earnings growth, dividends, buybacks or a higher valuation. Many coins offer no comparable ownership rights. Tokens may provide governance rights, enable transactions or serve other functions without entitling investors to a share of an organization’s profits.
A blockchain can attract users and generate fees without creating corresponding demand for its token. Investors therefore need to understand the tokenomics of the asset they are buying, including why users need the token, what rights holders receive and how network activity could support its market value. Tokenomics determines how tokens are issued, distributed and used within their networks.
What Happens When Tokenomics Fail Investors?
During the 2021 crypto boom, some projects had substantial token allocations scheduled for release over subsequent years. Filecoin, for example, distributed additional tokens through mining rewards and vesting schedules, increasing its circulating supply.
Among the 81 altcoins that lost at least 70% of their value, median circulating supply increased 49% over nearly five years, while median market capitalization declined 94.6%, according to CoinMarketCap.
Holding supply constant at its 2021 level while using observed 2026 market capitalizations, researchers calculated that 77 of those 81 tokens would still have lost at least 70%.
Filecoin’s circulating supply increased 585% between November 2021 and October 2026, while FIL fell 98.3%. Another popular project, Polkadot, saw its token supply increase 73%, while the price of its DOT token fell 97.5%.
The figures suggest that expanding supply amplified losses for some investors, while declining market valuations accounted for most of the price collapse. “Dilution contributed, but it does not fully explain the losses,” Alice Liu, head of research at CoinMarketCap, said in a written response.
For investors, token unlock schedules are one part of valuation. The initial price, circulating supply and expectations of future adoption also deserve scrutiny.
How Network Growth Affects Token Value
The economic relationship between a blockchain and its token varies greatly.
On Arbitrum, for example, users pay transaction fees in Ether (ETH), Ethereum’s native cryptocurrency, rather than in Arbitrum’s $ARB token. $ARB provides governance rights without automatically entitling holders to network income.
The crypto industry has also been reconsidering how tokens capture economic value. Some established projects have reduced issuance, while others have introduced buybacks or mechanisms to direct a portion of network revenue toward tokenholders.
According to CoinGecko, 28 major crypto projects spent more than $1.4 billion buying back their tokens in 2025, with ten accounting for 92% of the total. The programs reflect efforts to strengthen the economic relationship between a project’s activity and the value of its token.
Investors need to keep an eye on how a token’s economics change over time. Reducing supply, buying back tokens or sharing network revenue could help support their value, although it remains unclear whether these measures will improve long-term returns. Some projects have seen their tokens rise after changing their economic models. In August 2025, OKB surged 170% following an announcement that its supply would be sharply reduced. Hyperliquid has taken another approach, directing most of its trading-fee revenue toward buying back HYPE tokens, which have outperformed the broader crypto market this year.
Other projects have continued losing value despite similar buyback programs. The mixed results leave investors with another factor to assess: how much economic activity actually translates into demand for a token.
Five Years Later
The combined market capitalization of the original 100 altcoins declined by nearly half over five years, even as many of the projects behind them continued developing their technology. One possible explanation is that crypto investors are constantly looking for the next big thing. Over the years, new investment trends have emerged around NFTs, memecoins, AI and other technologies, drawing attention away from projects that dominated before.
“Every cycle, retail liquidity rotates to the newest narrative: memecoins, AI agents, now prediction markets,” Matt Cepulis, founder and CEO of marketing agency 3betmedia, said in a written response. “On the marketing side, I watch KOL [key opinion leaders in influencer marketing] budgets follow that rotation in real time. Established infrastructure tokens lose their narrative premium and nothing replaces it.”
Long-term investing is a familiar strategy in traditional markets. Yet the five-year performance of major altcoins suggests that holding on for too long can wipe out investors’ gains, even when the projects behind them continue developing.
“A new chain is essentially a startup, and most will fail to find product-market fit before running out of money and attention,” Andreas Brekken, founder of crypto exchange SideShift.ai, said in a written response. “It’s extremely competitive and a chain must fight for its position every cycle.”
As with stocks, assessing valuations, understanding dilution and evaluating competition remain important. For digital assets, investors also need to establish whether using a network creates demand for its token, whether holders benefit from the fees it generates and how future supply might affect their investment.
Five years after the 2021 boom, the results suggest that investors who correctly identified promising technologies still had to get two other decisions right: which token to buy and how much to pay for it.
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