Are you holding onto cryptocurrencies, hoping they will reclaim all-time highs in the next bull market? Chances are they might be ‘dead’. This resource gives you the tools to reassess cryptocurrencies you’ve held for a long time and provides a clear framework so you don’t get stuck holding onto “dead” coins.
Key Takeaways
- By looking at previous market cycles, most cryptocurrencies will either fail, never reach another all-time high or slowly bleed out.
- External tools can help you judge whether your cryptocurrency is dead.
- Our fundamental analysis framework helps you make more informed decisions when reassessing the ‘liveliness’ of your cryptocurrencies.
- All holders should consider other important questions when deciding to sell, hold or buy, such as emotional attachment, tax and the sunk-cost fallacy.
Look At History
Like any emerging technology or new business, 99% of cryptocurrencies will either fail, never reach another all-time high or slowly bleed out into irrelevance.
We quickly underestimate how much the top cryptocurrencies change from cycle to cycle.
See for yourself by looking at CoinMarketCap’s historical price data. What are the chances your altcoins will stay relevant by the time the next bull run kicks into overdrive?
Is Your Cryptocurrency Dead?
Luckily, many free tools are out there to help you reassess whether or not your cryptocurrency is dead. CoinGecko found over 50% of all cryptocurrencies have died since 2014.
A free tool via RootData archived a list of crypto projects that failed in 2023, either by announcing a closure, entering bankruptcy or having inactive websites.
Are you holding a ‘dead’ crypto project?
Key Questions When Reassessing Your Cryptocurrencies
Not all cryptocurrencies will be on the above lists—some may still be operating but could be next.
There are a few things you can do to assess your cryptocurrencies. Use our framework below to make more informed decisions and help you reassess your cryptocurrencies.
Look At Fundamentals
For each cryptocurrency you hold, ask the following list of fundamental questions and answer with a ❌ (no), ✔️ (yes) or ➖ (uncertain).
| Fundamental | ❌(no) ✔️ (yes) ➖ (uncertain) |
|---|---|
| Timing—do they solve a growing need? | |
| Are they still building & releasing updates or new products? | |
| Do they still have a community of developers and an active or growing ecosystem? | |
| Are they active across their socials? | |
| Have they gained any legitimate adoption? (i.e. onchain metrics) | |
| Are they being surpassed by competitors? | |
| Do they have sufficient runway left? | |
| Are the tokenomics sound or broken? (i.e. how useful is the token?) | |
| Do they have an outdated or redundant narrative? | |
| Are there any upcoming catalysts? |
Other considerations
Fundamentals are still just one part of the picture.
Other critical questions you should be asking yourself (in consultation with your tax professional) include:
Are you too emotionally attached?
Being too emotionally invested can lead to failing to look at your cryptocurrency objectively and can cloud your judgment.
A question to ask when reassessing a cryptocurrency to judge emotional attachment is, “If I bought this today, at this price, would I be happy?”. If the answer is no, then this is a sign you’re too emotionally attached.
Do you understand how much it needs to return to its previous high?
Consider how much it will take to get back to all-time highs or break even.
For example, if you’re holding a 70% loss, the cryptocurrency must increase +233% to break even.
| How negative your altcoin is (%) | Price increase needed to return to break even (%) |
|---|---|
| -10% | +11% |
| -20% | +25% |
| -30% | +43% |
| -40% | +67% |
| -50% | +100% |
| -60% | +150% |
| -70% | +233% |
| -80% | +400% |
| -90% | +900% |
Can you save on tax by selling?
Many holders fail to overlook one of the most important steps—talking to your tax professional.
Often (depending on where you live), you can tax-loss harvest any cryptocurrencies you no longer want to hold.
Are you stuck in a sunk-cost fallacy?
The market does not care whether you (or anyone) have poured hours into researching and tracking a particular altcoin that you’ve held at a loss for years.
Consider the opportunity cost of holding. Do you see a higher probability of upside on something different versus this particular altcoin you’re holding?
There could be a greater opportunity cost in not realising any losses and using that new time, attention and capital to look at other cryptocurrencies that tick all the boxes in the above fundamental analysis table.