The Internet Computer (ICP), launched to be a decentralized version of the Internet, has reached a major milestone. More smart contracts than ever launched in the last quarter of 2024, showing a robust ecosystem. Yet, despite this, last year was not great for the ICP token.
In the fourth quarter of 2024, ICP reported a record number of smart contract deployments. At 287,000, this figure increased sixfold compared to the same period in 2023. This shows that the network has a robust development ecosystem, with many projects launching on its platform.
Still, despite this growth, the ICP token has been struggling in that period. The token is currently trading at $7.00, down from the yearly high in March 2024 of $20.90.
The performance is even worse when compared with many popular projects. For instance, Solana is up 83.29% yearly, while XRP is up 363.56% in that same period.
Why ICP is Still Struggling
Several factors are contributing to ICP’s slow performance. The total value locked (TVL) on the chain has been on the decline since its peak in April 2024. From that time, it dropped from over $100 million to its current $33 million.
This relatively small ecosystem suggests that adoption is growing slowly. The network has few users, so investors are not confident it can support its current market cap. This is also compounded by negative sentiment, which has not recovered ever since the major price crash in 2021. At the time, the token dropped from $500 to $35. Since then, the token has been on a continuous decline.
The weak performance also prompted investors to question its tokenomics. It prompted criticism over the foundation’s supposed protection of insiders and early investors. For instance, Arkam Intelligence published a report claiming that analysts dumped “billions” in ICP tokens near the launch. This came at the cost of retail investors, who suffered losses.
More recently, there are signs that big holders, or whales, are continuing to offload the token. For instance, between June and November 2024, addresses holding more than 100k ICP dropped 10% to 777.
Finally, ICP is facing increasing competition from other projects. With more projects to choose from, investors are increasingly diversifying, and some are leaving ICP.
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