The collapse of the Internet capital market: What’s behind the drop?

The Internet Capital Market (ICM) sector has experienced a sharp decline in activity, raising questions about its long-term viability. Believe app trading volume plunged 80% from the high we saw last week.

In parallel, the creation of new tokens also fell by 77%, indicating a slower market interest.

Is the end of the Internet Capital Market near?

Dune Analytics data reveals that daily trading volumes for ICM tokens have been declining continuously since peaking at $729.3 million on May 14th. On May 20th, trading volumes were recorded at just $143.6 million.

Similarly, the number of newly created tokens fell from 4,977 on March 13th to 1,134 between May 20th.

Additionally, Believe App has facilitated the creation of over 23,000 tokens so far. However, only 5.3% of these tokens are activated.

This low activation rate suggests that many tokens may not be gaining traction or interest from the user. This indicates an oversupply of tokens released or a lack of utility.

This trend has also attracted acute criticism from industry observers. Analyst Mars Defi recently pointed out an erosion of user trust in ICM in a statement on X (formerly Twitter). He attributed the decline to the influx of “empty tokens” driven by the memecoin epidemic.

“The users were meant to believe in a new capital formation. Instead, they have the noise. And now we definitely hit a fatigue point. Not a token, but an empty token. This is a turning point and a wake-up call.”

Analysts argued that ICMS’ original vision to cultivate valuable product-driven projects was undermined by almost virtually low efort launches. He also noted that the age of meme-driven markets is declining.

According to him, the problem is not the meme itself, but it no longer provides the content and reliability necessary to maintain long-term profits.

“Endgame is not a launchpad. It’s a fluid, decentralized capital market. Rather than “launch coins and disappear,” it’s “launch your product and build it in public.” That is the power of ICM. And that’s where this is heading if we continue to support real products and support meaningless memes,” he writes.

Dyor co-founder Hitesh Malviya had previously warned that ICM stories might only last four to six weeks of momentum. This sector shows signs of fatigue just a week after the peak, which could mean that Malviya’s predictions are realising.

Nevertheless, not all developments refer to a permanent recession. Believe founder Ben Pasternak recently announced the upcoming release of the Believe API.

“The goal of the API is to make it easier for builders to create harmony between the product and the coin no matter what the product does,” Pasternak said.

This development could attract more builders to the platform. Additionally, by allowing developers to integrate better features into their projects, it could spur token creation and revival of transaction volumes.

Furthermore, Base Network is also paying attention to trends in the capital markets of the Internet. Jesse Pollack, head of wallet at base and Coinbase, told Beincrypto he believes that token creation and the growth of decentralized applications are viewed as part of this emerging ICM trend.

“We are delighted that the base’s TGES and new apps are steadily increasing, all of which are considered the internet’s capital, with more than $14 billion in assets being seen as the heart of its emerging global economy,” Pollak says.

He also highlighted the role of bases in supporting the crypto economy by providing infrastructure and tools to users and developers.

“If you want to turn billions of people on-chain, then one day, more will soon be tokenized, and the base will provide both infrastructure and tools, helping both consumers and builders to deploy the token,” he added.

Still, the challenges remain. If the ICM sector wants to regain user trust and maintain growth, it will need to shift its focus from speculative, meme-driven launches to projects with concrete utilities.