Larger supply, shorter life? Exploring evidence from alternative cryptocurrencies on decentralized exchanges

Abstract

Since the advent of Bitcoin, numerous alternative cryptocurrencies have surfaced. Despite their proliferation and increasing popularity, these alternatives often experience brief lifespans, contrasting with Bitcoin's enduring presence. Our analysis of more than 800 alternative cryptocurrencies traded on decentralized exchanges (Dex) has shown that cryptocurrencies with larger supplies generally demonstrate shorter lifespans. The findings remain robust across different definitions of the term “lifespan”. We attribute this trend primarily to short-term speculation, stemming from the absence of intrinsic asset value. These findings hold significant implications for comprehending the risk and investor behavior associated with cryptocurrencies on decentralized exchanges.