The Non-Fungible Token (NFT) market, once a burgeoning sector of the digital economy, has recently shown signs of significant contraction. A series of events, including declining sales volumes, the shutdown of major platforms, and fluctuating floor prices of popular NFT collections, have raised questions about the sustainability of this digital asset class.
According to data, the NFT market has witnessed an 81% drop in monthly trading volume between January 2022 and July 2023. This decline is not isolated to a specific platform or type of NFT but appears to be a market-wide phenomenon. The number of sales has also seen a 61% decline during the same period.
Popular NFT collections like Bored Ape Yacht Club and CryptoPunks have not been immune to this downturn. Floor prices for these collections have reached their lowest points in over two years. This decline in floor prices has been accompanied by a decrease in overall trading volume for these collections, further exacerbating the downward pressure on prices.
Adding to the market’s woes are the recent announcements of platform shutdowns. Recur, an NFT platform that had raised $50 million in funding and was valued at $333 million, announced its closure due to unforeseen challenges. The platform will disable NFT deposits by November 9, 2023, and traders have until November 16 to withdraw their remaining assets.
Similarly, Nifty, another platform dedicated to Web3 creators, has also declared the winding down of its operations. Despite previous plans for a new decentralized storage-based platform, the company cited financial struggles as the reason for its immediate shutdown.
Blur, a leading NFT marketplace, has seen its Ether-measured sales volume plummet by 96% between late June and early August. This decline is in line with the market trend but is particularly alarming given Blur’s previous position as a leading platform in the space.
Despite the overall grim outlook, some segments of the market are showing resilience. High-end NFT artworks from well-known creators have seen a consistent increase in demand. Additionally, low-value utility tokens used in games have also experienced a surge in interest.
- Monthly NFT sales fell for a fifth consecutive month to $495 million in July, the lowest level since April 2021.
- NFT trading volume declined 29% and the number of sales dropped 23% from June to July.
- Sales of Ethereum -based NFTs plunged by 84%, dropping from $659.02 million in February to $106.12 million in August.