Crypto Enters a New Era of Project Failures
The crypto industry is going through a major shakeout as weak business models, falling token prices and tighter venture funding expose projects that struggled to build sustainable economics during the previous boom.
More than 100 crypto projects have reportedly shut down, entered bankruptcy or effectively disappeared in 2026, according to RootData figures cited by CoinDesk. The failures highlight how quickly businesses can run into trouble when token treasuries decline and fresh capital becomes harder to secure.
Ryan Kirkley, CEO of Global Settlement Network, argues that many of these failures were not unexpected. Instead, he believes they are the delayed result of aggressive fundraising and inflated valuations during the 2020–21 crypto boom.
Too Much Funding Created Unsustainable Valuations
One of the biggest problems facing crypto startups is the gap between the amount of money they raised and the revenue their businesses actually generate. Kirkley argues that companies accepting extremely high valuations can create unrealistic expectations for future growth.
When a startup raises capital at an excessive valuation without a clear path to profitability, it may eventually need to become a multibillion-dollar business simply to justify another financing round. That becomes especially difficult when crypto markets enter a prolonged downturn.
Venture funding has already slowed. Galaxy Research reported that crypto and blockchain companies attracted around $4 billion across 355 deals during the first quarter of 2026, roughly half the amount invested in the previous quarter.
Crypto Fundraising Is Facing a Reality Check
Crypto's fundraising environment has historically placed significant emphasis on headline numbers. Large financing announcements could generate attention, increase token interest and attract retail investors even when the actual amount of capital available to a project was less certain.
Kirkley also pointed to situations where investors failed to ultimately provide capital after commitments had been announced. That creates an important distinction between a financing round being publicly announced and the money actually reaching a company's treasury.
The shift toward more cautious funding means crypto businesses increasingly need to demonstrate revenue, sustainable expenses and a realistic path toward profitability rather than relying primarily on token appreciation or another funding round.
Decentralized Governance Faces Its Own Test
Crypto's experiment with token-based governance is also facing pressure. Owning governance tokens does not necessarily mean users are actively participating in a protocol's decision-making process.
Kirkley argues that governance can sometimes make it harder for struggling projects to respond quickly. When important decisions require token-holder votes, protocols may have less flexibility to change strategy during periods of financial stress.
The broader market is therefore beginning to distinguish between projects with active, economically useful ecosystems and those whose tokens or governance systems failed to create lasting value.
Stablecoins and Institutional Infrastructure Stand Out
As weaker projects disappear, some parts of the crypto industry appear better positioned for long-term adoption. Kirkley points to stablecoins, neobanks and institutional-grade wallets and settlement infrastructure as areas attracting greater interest.
These sectors have a clearer connection to real-world financial activity, including payments, settlement, custody and the movement of digital assets. That could make them more resilient than speculative segments of the market.
For background on stablecoin infrastructure and blockchain adoption, the BIS official website provides research on digital currencies, tokenization and the future of payments.
Bitcoin Faces a Critical Support Test
The broader crypto shakeout could become more severe if Bitcoin loses an important technical support area.
Bitcoin was trading around $64,100 at the time of publication, while Kirkley identified approximately $61,200 as a critical support level. A decisive break below that area could increase selling pressure, particularly among traders using leverage.
Kirkley suggested that a breakdown could eventually expose Bitcoin to a much lower level around $41,000. That scenario would likely create additional stress for crypto businesses holding large amounts of tokens or depending heavily on market-driven revenue.
Adoption Is Growing Despite the Market Weakness
Despite the industry's failures, blockchain adoption continues to expand among governments and financial institutions. Kirkley said he had recently met representatives from seven governments interested in exploring blockchain technology.
Global Settlement Network is focused on infrastructure for regulated financial institutions, including digital currencies, tokenized assets and cross-border settlement. This reflects a broader trend toward using blockchain technology within established financial systems.
The International Monetary Fund also provides research on digital currencies, payments and the changing structure of the global financial system.
Institutional Adoption Could Change Crypto's Original Vision
The growing institutional interest in blockchain comes with an important distinction: governments and financial institutions may want the technology without embracing the fully decentralized financial system originally envisioned by the crypto industry.
Institutions are increasingly interested in blockchain because it could reduce settlement costs, improve payment efficiency and enable new forms of tokenized financial assets. Those applications do not necessarily require completely permissionless networks.
The Bank for International Settlements has also published extensive research into tokenization, stablecoins and central bank digital currencies, showing how blockchain-related infrastructure is becoming part of mainstream financial-policy discussions.
What the Crypto Shakeout Means for the Market
The current wave of crypto project failures could mark a transition away from an era where access to cheap capital and rising token valuations allowed businesses to operate without sustainable revenue.
Projects with weak economics may continue to disappear as venture funding becomes more selective and investors demand clearer evidence of product-market fit. Meanwhile, infrastructure connected to payments, stablecoins, custody and institutional settlement could receive a larger share of industry attention.
Crypto's next phase may therefore look very different from its previous cycle. The market could be smaller in terms of speculative projects but stronger in areas where blockchain technology provides a clear economic purpose.
