 ▲ Altcoin, ETF/ChatGPT-generated image |
The prolonged slump in the altcoin market is not merely the result of supply-demand imbalance but an inevitable consequence of structural design flaws in tokenomics.
Guy Turner, host of the cryptocurrency-focused YouTube channel Coin Bureau, stated in a video released on February 13 (local time) that the fundamental reasons behind the disappointing performance of the altcoin market in 2025, contrary to expectations, were pressure from token unlocks and improper capital allocation strategies. Citing Tokconomist’s annual report, Turner noted, “Buybacks are meaningless if emissions exceed them.” According to the report, of the $8.1 billion in buybacks executed in the digital asset market in 2025, 79% was concentrated in OKB, highlighting severe market imbalance. In particular, burn models utilizing protocol revenue led to an average price increase of 73%, while projects that relied on foundation funds saw their prices fall by 33%, demonstrating that the method of securing funds is a decisive factor in returns.
Major exchange tokens and Layer 1 projects also made aggressive adjustments to their tokenomics, but results were mixed. OKB implemented a drastic policy by burning 93% of its total supply and aligning its maximum issuance with Bitcoin (BTC) at 21 million OKB, while BNB burned $4.7 billion worth of tokens to defend against inflation. In contrast, Ethereum (ETH) burned $280 million worth of ETH but recorded 0.5% inflation due to reduced mainnet transactions amid Layer 2 expansion. Solana (SOL) also experienced a sharp decline in its burn rate following changes to its fee distribution model, resulting in a high annual inflation rate of 3.9%.
Large new projects launched in 2025 suffered disastrous failures, trapped in the bubble of excessive initial valuations. Major projects such as Bio Protocol (BIO) and Berachain (BERA) recorded average declines of more than 60% after launch, with Bio Protocol plunging 94% due to an excessive valuation multiple of 77 times. This case clearly illustrates how vulnerable inflated fully diluted valuations are in the absence of meaningful network contribution or revenue generation. Despite raising $37 million in funding, the project’s listing at a $2.8 billion valuation became the catalyst for its price collapse.
Market attention is now turning to the massive token unlock schedule set for 2026 and the resulting volatility. On March 13, Whitebit (WBT) will see its supply increase by 27%, while on July 12, 82 billion PUMP tokens will be released into the market. Arbitrum (ARB) and Sui (SUI) are also scheduled for additional token unlocks in February and March, respectively, raising concerns over supply instability. Turner emphasized that rather than the unlock events themselves, fear-driven selling that follows tends to accelerate price declines, underscoring the need for thorough risk management by investors.
The digital asset market is demanding a transition beyond mere technological competition toward a Tokenomics 2.0 era that delivers tangible value back to investors. The success or failure of projects now depends not only on supply control but also on revenue distribution and transparent governance. Altcoins that fail to adapt to this shift will inevitably be left behind. To navigate the ongoing wave of oversupply expected to continue into 2026, investors must closely examine each project’s circulation plans and funding sources for token burns.
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