Why Are More Projects Falling in 2026 Without Crashes or Hackers?

On July 17, BitMart released an ambitious mid-year report: asset management grew by about 256%, new prediction market products were launched, and they just received an Australian financial services license in June. The report also acknowledged the unfavorable backdrop, with Bitcoin down 30% over six months and Ethereum halved, while spot ETFs saw record net outflows.

Nine days later, on July 26 at 01:30 UTC, the same company announced an orderly shutdown. New user registrations were halted, deposits closed, and contract accounts switched to a liquidation-only mode, with a complete halt to trading on August 26 and a total closure by January 31, 2027. The platform token BMX dropped nearly 60% that day.

Even more absurd was the statement from former global CEO Nenter Chow on X: He was notified of his dismissal on July 24 and had not participated in any management or decision-making since then; he learned about the shutdown just like everyone else from the announcement.

Three days prior, BitMEX had just announced it would close its exchange on September 23 at 04:00 UTC, ending 11 years of operation.

Going further back, AscendEX had already shut down on July 1, and EXMO entered liquidation after being placed on the UK sanctions list against Russia.

In just one month, four well-known centralized exchanges exited the market.

RootData's list of dead projects in the crypto industry for 2026 has reached 100 and is still being updated.

The Numbers Aren't That Big

The number 100 sounds alarming in the title, but when placed in a historical context, it’s not that frightening.

According to RootData's own statistics, there were 67 in 2021, 250 in 2022, 230 in 2023, and 171 in 2024. With seven months gone in 2026, there are fewer than 100, and it’s highly unlikely to catch up to 2022 and 2023 for the entire year.

Thus, 2026 cannot yet be called the coldest summer for the crypto industry; the real coldness lies in the quality of the death list.

Looking through the names on the list: wallets like Family, Ctrl, Leap; exchanges like BitMart, BitMEX, AscendEX; infrastructure and DeFi projects like Zapper, Stream Finance, Parsec, Loopring, Goldfinch.

BitMEX lasted 11 years, BitMart lasted 9 years, and Loopring was among the earliest zkRollups on Ethereum. These are not air projects that launched in 2024 and ran away in 2025; they are veterans with brands, users, real revenue, and who survived the last bear market.

In 2022, the dead were leveraged and Ponzi schemes; a longer death list means a cleaner industry. In 2026, the dead are business models; a shorter list indicates that the knife has cut into the flesh.

From Explosions to Starvation

The manner of death has changed.

The common feature of the deaths in 2022 was violence: Luna went to zero in three days, 3AC faced margin calls, FTX misappropriated customer assets and was bank-run, Celsius froze withdrawals. Death happened in an instant, with user assets evaporating directly, and legal proceedings are still ongoing today.

The common feature of this batch in 2026 is dignity.

BitMEX gave users a full two months to close positions, with withdrawal windows open until 2027; BitMart provided one month for closing positions and six months for withdrawals, repeatedly reminding users to complete identity verification before applying; Storj opted for Chapter 11 restructuring instead of liquidation, with the network continuing to operate and customer service uninterrupted.

The wording of the announcements was almost identical: After careful evaluation of operational conditions, market environment, and future strategic direction, we have decided to exit in an orderly manner.

Translated into plain language, this means the business is no longer profitable. There are no hackers, no bank runs, no law enforcement raids; it’s just that the accounts don’t add up anymore.

Starvation and explosions are two completely different market signals. Explosions indicate systemic risk is contagious; one collapse can bring down many. Starvation indicates individual operational failure, with risks isolated within their own balance sheets.

The Collapse of the Mid-Tier

The distribution of the death list is not random; it precisely strikes at the waist of the industry.

Simon Dedic of Moonrock Capital put it bluntly regarding the problems of mid-tier exchanges: The fatal flaw of this model is its reliance on a continuous influx of new users; once that flow stops, the business cannot sustain itself.

A mid-tier exchange needs compliance licenses, physical presence in multiple locations, market maker rebates, 24/7 customer service, risk control, and audit teams. This fixed cost can reach tens of millions of dollars a year, only being diluted by transaction fees when volumes are sufficiently large. Before its shutdown, BitMart’s trading volume was about $1.6 billion in the 24 hours prior, which sounds substantial, but is less than a fraction compared to Binance. The average daily trading volume across the market has shrunk from its peak to around $37 billion, with leading platforms continuing to profit from scale and derivatives, while on-chain native tools can survive due to their minimal fixed costs. Only the mid-tier layer sees revenues decline linearly with market conditions, while costs remain rigid.

The primary market corroborates this. In 2025, there were 933 financing events, a 40.3% year-on-year decline, marking a five-year low, but total financing amounts increased by 120.6%, with money flooding into a few super-large targets like Polymarket and Binance. In Q1 2026, financing totaled $4.59 billion, down 46.7% quarter-on-quarter, with an average of $36 million, which is 4.4 times the median of $8 million. The result of capital voting with real money is a convergence towards the top and a contraction at the tail, while the mid-tier neither attracts large sums nor has secondary market valuation support.

The death list is merely a temporal manifestation of this capital structure.

Token Experiments in Bankruptcy Court

Storj deserves special mention.

On July 26, Storj Labs filed for Chapter 11 in the U.S. Bankruptcy Court for the Northern District of West Virginia, case number 5:26-bk-00512. The company emphasized that this is a voluntary restructuring rather than a cessation of operations, with the storage network continuing to function and parent company Inveniam providing ongoing support. The goal is to clear historical debts from previous acquisitions, divest non-core businesses, and refocus on decentralized storage.

What’s truly interesting is the idea they proposed in an open letter to the community: Exploring a court-approved mechanism that allows STORJ token holders to participate in the equity of the restructured company.

This is unprecedented. Tokens have always been in a legal gray area, neither equity nor debt, and typically hold no value in bankruptcy proceedings. If Storj can indeed allow utility token holders to exchange for equity under court supervision, it would significantly advance the legal status of crypto assets. The company has also stated that the distribution mechanism and participation terms are not yet finalized, and everything awaits court approval of the restructuring plan.

An eight-year-old project, at its most desperate moment, might leave behind a precedent more important than its storage network. Such things only happen in a true bear market, as only companies with no way out would attempt untried paths.

Is This a Bottom Characteristic?

To conclude: the death list is a lagging indicator; it proves that a clearing is occurring but does not prove that the clearing has ended.

Looking back at 2022, Bitcoin bottomed in November after the FTX collapse, while RootData recorded 250 dead projects, most of which were concentrated in the six to twelve months following the collapse. Project shutdowns require completing the full process of layoffs, liquidation, withdrawals, and legal matters, which naturally lags behind price movements. Using death counts to time the bottom is akin to using last year’s newspaper to predict tomorrow’s weather.

What truly needs to be monitored are three other sets of data.

The first set is ETF fund flows. In Q2, U.S. spot Bitcoin ETFs saw a net outflow of about $5 billion, the largest quarterly outflow since the product's launch in January 2024. CoinShares' James Butterfill calculated that approximately $8 billion flowed out over eight weeks starting in early May, equivalent to 8% of ETF assets under management, comparable to the bottom of the 2018 cycle. A turning point appeared between July 14 and 23, with spot ETFs seeing net inflows for seven consecutive trading days, totaling $981.2 million. A seven-day positive inflow is not enough to confirm a trend reversal, but it at least indicates that selling pressure is no longer one-sided.

The second set is the median of financing in the primary market. Total amounts can be inflated by one or two large financing events, but the median does not lie. The $8 million in Q1 2026 reflects the true level of the current market; if this number does not decline for two consecutive quarters, it indicates that the financing environment for early projects has bottomed out.

The third set is the completion rate of the mid-tier clearing. The pace of shutdowns for mid-tier exchanges, second-tier L2s, and DeFi protocols reliant on token incentives is still accelerating, with four exchanges exiting in just July.

Until this batch completes, it is too early to discuss the industry bottom.

Therefore, the death list of 2026 is hard to say is a bottom signal; it is more like a clearing receipt. It tells the market that business models sustained by token incentives and new user inflows have been systematically disproven, and the companies that survive must have real revenue.