The major cleanup in the crypto market, why are the mass devaluations of scam coins considered an inevitable part of a bull market?

Recently, cryptocurrency market analyst Ben Cowen’s views have sparked widespread discussion — he proposed that a “cleansing” of millions of altcoins is underway, and this is a necessary prerequisite for Bitcoin to move toward a sustainable bull market. As of May 9, 2026, Gate’s market data shows that Bitcoin’s price hovers within a key range, and market sentiment has yet to break out of a divided pattern. Meanwhile, Ethereum and the broader altcoin markets continue to be under pressure, and the total cryptocurrency market cap remains in a phase of structural adjustment. Against this backdrop, Cowen’s theory of “trash coin” cleansing not only echoes recent market price performance but also touches on a deeper industry question: after experiencing rapid expansion, does the crypto market need a thorough self-purification to make room for the next phase of high-quality growth?

What is the “Altcoin Cleansing” Phenomenon

The so-called “altcoin cleansing” is essentially a process of value reversion and liquidity exhaustion among a large number of low-quality projects in the crypto market. Ben Cowen pointed out that since 2021, this cleansing has been quietly progressing, with thousands of speculative “trash coins” eliminated by the market. From a data perspective, the scale of the cleansing is quite significant: statistics show that over 50 million tokens have been deployed in the crypto space, most of which are now inactive. Throughout 2025, more than 11.6 million token projects failed, mainly due to the bubble burst in the meme coin sector. Moreover, these failure figures conceal a deeper reality — many tokens have never gained any secondary market liquidity since their creation. Long-term industry experts’ judgments also support this: Cardano founder Charles Hoskinson and Ethereum co-founder Vitalik Buterin predicted that over 90% of ICO projects would ultimately fail, while Ripple CEO Brad Garlinghouse believed that 99% of cryptocurrencies would eventually go to zero.

Why the Proliferation of Trash Coins Hinders Bitcoin’s Bull Market

From the underlying logic of capital flow, the large presence of trash coins constrains the structure of Bitcoin’s bull market. First, a large number of speculative tokens continuously deplete the market’s limited liquidity. When millions of tokens seek funding support simultaneously, any new outside capital entering the market is infinitely diluted across hundreds of narratives, making it difficult to form a concentrated capital-driven momentum. Second, the “high volatility, low value” characteristic of trash coins distorts investors’ risk pricing systems, leading long-term capital to hold a higher risk premium on crypto assets overall. Ben Cowen emphasized that unless thousands of speculative tokens are cleared from the market, a sustainable bull cycle will be hard to see. In other words, altcoin cleansing is not just a phenomenon but a necessary step in the market’s shift from “quantity expansion” to “quality reassessment.” Only when low-quality speculative projects are eliminated can the truly fundamental sectors receive full attention, and capital can shift from scattered “narrative hunting” to long-term value accumulation.

When Did the Cleansing Process Begin?

The clearing of altcoins is not a sudden event but a structural process that has been advancing deep within the industry for years. This round of cleansing can be traced back to 2021. At that time, with the explosion of DeFi and NFT booms, the tools for simple token issuance significantly lowered the barriers to entry, leading to an exponential increase in speculative token supply. Subsequently, in 2022, the systemic credit collapse of CeFi and the ongoing Federal Reserve rate hikes from 2023 to 2024 accelerated this cleansing rhythm. By 2025, the market environment worsened further: industry data shows that among new tokens issued in 2025, 84.7% of TGE projects traded below their issuance valuation, with median token declines reaching 71%. In the first quarter of 2026, systemic sell-offs swept across the market, with Bitcoin falling from about $93,000 at the start of the year to around $63,000, and the average decline of altcoins was even more severe, with many tokens retracing 60% to 80% from their cycle highs. This process has been called the “extreme cold cleansing period” by market observers — rather than a passive decline, it is more like an active process of structural value reversion.

Why Capital Flows Confirm the Cleansing Logic

Market pricing mechanisms often lead macro analysis. The trend of capital shifting from high-risk tokens to relatively stable assets is confirming the rationality of the cleansing logic from data. Bitcoin’s market dominance (BTC.D) is one of the most convincing signals. As of early May 2026, Bitcoin’s dominance has risen above 61.3%, the highest level since November 2025. Excluding stablecoins and some low-liquidity tokens, this ratio is even higher: Cowen pointed out that after excluding stablecoins, Bitcoin’s actual market share exceeds 67%. In comparison, the total market cap of meme coins plummeted from about $150 billion in December 2024 to less than $50 billion now, shrinking by over two-thirds. These data clearly reflect the market’s flight-to-safety behavior — as uncertainty rises, funds spontaneously withdraw from “story-driven” projects and concentrate into Bitcoin, which has the longest operational history and highest consensus.

Historical Examples of “Cleansing” Cycles

The crypto market has not experienced large-scale token “cleansing” for the first time. After the ICO bubble at the end of 2017, over 80% of ICO projects proved to be fraudulent or valueless tokens within two years. The DeFi summer of 2021 spawned many liquidity mining tokens that were “forks and上线” (launched directly), but most of these went to zero or fell into zero trading during the bear cycle. What makes this round of cleansing unique is its broader scope and more participants — not only individual investors but also venture capital firms have suffered heavy losses in the overvalued, low-circulation issuance structures. To some extent, this can be seen as a “metabolism” mechanism unique to crypto: inefficient capacity is cleared, allowing high-quality narratives and sectors to absorb concentrated market attention and capital. Cowen believes this cleansing process is fundamentally about clearing risks for the next bull run — when the market is flooded with tokens that go to zero daily, retail sentiment and institutional confidence cannot truly recover.

How Will the Crypto Market Landscape Evolve After Cleansing

After large-scale cleansing, the structure of the crypto market may show several notable changes. First, Bitcoin’s market share could further increase. Some studies predict that by 2030, Bitcoin’s dominance may approach 70%. This means Bitcoin will play an even clearer role as the “benchmark asset” in crypto. Second, the internal differentiation within the altcoin market will intensify significantly. Projects lacking products, users, or substantial revenue will be marginalized, with only a few blue-chip projects with real adoption scenarios and continuous iteration surviving and benefiting from re-concentrated liquidity. Third, industry narratives will focus more on real value — directions like RWA (Real-World Asset) tokenization, AI and blockchain integration, and stablecoin payment infrastructure will continue to attract institutional capital, while purely sentiment-driven “meme” narratives will gradually give way to application layers with fundamental support. However, this process also carries significant market risks: investors will need to raise their standards for project selection — the “buy any new token and it will rise” logic of recent years has become invalid, replaced by in-depth scrutiny of tokenomics, revenue sources, and community operations.

Summary

Cowen’s theory of “cleansing millions of altcoins” reveals the deep-rooted issues in the current stage of the crypto industry: the market needs a systematic value reversion, and Bitcoin’s sustainable bull market can only come after the collective cleansing of trash coins. From the failure of over 11.6 million projects in 2025 to Bitcoin’s dominance surpassing 61.3%, a series of data depict a silent but profound market structural cleansing. The macro tightening environment combined with narrative fatigue is accelerating the process of natural selection. In the future, crypto market competition will shift entirely from “quantity” to “quality” reassessment. Investors must evaluate projects with higher standards, focusing on fundamentals rather than simply following short-term narratives.

FAQ

Q: How many altcoins does Cowen believe need to be cleansed before the market is considered to have completed the process?

A: Cowen has not specified an exact number threshold but emphasizes that unless “the vast majority” of thousands of speculative tokens are eliminated, a sustainable Bitcoin bull market will be difficult to achieve. Correspondingly, over 11.6 million projects failed just in 2025.

Q: Is the “trash coin” cleansing a long-term bearish or bullish signal?

A: In the short term, the cleansing process involves a large number of tokens’ prices falling and liquidity shrinking, which is bearish for holders of related assets. But from a long-term structural perspective, cleansing removes market redundancies that hinder efficient capital allocation, reserving stronger pricing power for quality assets and helping the market mature.

Q: Does the continuous rise of Bitcoin dominance mean that altcoins will never have a spring again?

A: Not necessarily. Historical cycles show that Bitcoin dominance tends to rise in the early stages of a bull market and gradually declines in the mid-to-late stages as altcoins rotate. Currently, Bitcoin dominance has broken above 60.88%, surpassing the accumulation range of the past eight months, but the altcoin season index remains low. True rotation requires more signals to confirm.