In the past, it was easy to make money in the NFT market. You could simply invest in a new token and watch your investment grow as demand for the token increases. However, over the past few months, the NFT market has become incredibly volatile. The value of many tokens has decreased significantly, and it has become much more difficult to make money investing in NFTs.
Some people believe that the NFT market has entered a bear market, with many investors losing faith in NFTs and looking for other investment opportunities. Others, however, remain confident that NFTs will eventually recover and regain their previous levels of value and popularity.
Some analysts predict that the NFT market is entering a period of consolidation, where only the strongest NFT projects will survive. Other experts believe that we may see NFTs play an even more important role in the future of web3 and blockchain.
But the main question we want to answer in this blog post is: Is the NFT market dead? Or is there still growth potential? Let’s take a closer look at what’s been happening in the NFT market and what might be next for this exciting industry!
Something We Did Not Expect
Non-Fungible Tokens (NFTs) have clearly lost the luster they had in early 2021. The so-called bull run is over, liquidity has evaporated, and trade volumes have tanked with popular marketplace OpenSea experiencing a drop of more than 90% since May.
To make matters worse, OpenSea had to let go of 20% of its workforce last July because conditions were so bad. Those who bought NFTs at this time are wondering what happened to their investment.
It’s clear that the NFT market has been affected by the ongoing bear market in cryptocurrency. But this shouldn’t come as a surprise to anyone who has been following trends in the web3 space.
One factor contributing to this downturn is speculation around NFTs and their ability to function as currencies. While NFTs have some utility, they are not designed to be used as everyday currencies or tokens of exchange.
This lack of use case leads many investors to see NFTs primarily as investments, which can make them more susceptible to volatility when there is less confidence in the overall crypto market, especially in the current market conditions.
Let’s Talk Numbers
From the different NFT statistics sources, we have found out that the daily NFT sales surpassed 160,000 from October to December 2021, then decreased between January and March of this year to 80,000-120,000.
NFT sales have dropped significantly since their peak, with daily sales numbers now only at around 40,000 and daily sales volumes down to $9.2 million as of September 2022. However, this is still a sharp decline from the market’s strongest months — January and May— where daily sales frequently topped $150 million per day.
Despite popular belief, NFT trading volumes have dipped down to 97% since January. Reports suggest that the assumed NFT bubble is affected due to the bear market that is currently happening within the cryptocurrency industry, wiping out around a $2 trillion loss in the crypto market.
This can be in part due to the rapid policies implemented against blockchain, the stock market bear market, and continuous inflation rates. This seemingly never-ending exposure to bad news and scams has caused an emotional trainwreck for users.
A Bloomberg headline recently announced that NFT sales have declined sharply, going from $17 billion in January to only $466 million in September. Additionally, a Reuters report stated that NFT sales have decreased by 60% from Q2 to Q3. Furthermore, the average NFT sale has also plummeted, dropping from $3,894 in May down to merely $293 in July—an astonishing 92% decline.
Not only trading volumes and market caps, but we also can see a decrease in NFT floor prices as well. The sales volume of Ethereum Names Service has risen by 133.95% in the past month, comparing it to Blue-chip NFTs like Bored Apes, CryptoPunks, and Azuki which are experiencing sharp turns in floor prices.
Bored Ape had the highest sales for an individual NFT this month still, but its total trading volume is down 42.96%. Similarly, CryptoPunk is down 21.24% and Mutant Ape falls by 29.95%.
Furthermore, the recent market crash has caused the US Dollar value of these NFTs to drop. In ETH, the top 100 NFTs by market cap saw their value decrease by 27%, and when converted to USD, their value has greatly decreased down to 44%.
What Do The Experts Say?
Currently, it’s uncertain if NFTs will rebound from the recent bear market. However, with a trend of increased adoption by content creators and developers, more exploration of new applications for NFTs, and extra liquidity in NFT markets – it appears that the growth in the size of the NFT market is likely to continue.
The fall in NFT trading volume is seen by some as a sign of negative sentiment in the bigger picture of the world economic recession, but it shouldn’t be taken as an indication that NFTs are done for. The global crypto market has been below the $1 trillion mark for a while now, but observers believe the negativity won’t last forever.
Sumit Ghosh, co-founder, and CEO of Chingari – the world’s leading social app built on a blockchain – says that recently, Solana projects like DeGods and Yoots have reignited global interest in NFTs.
On May 21st, the NFT scene on the struggling Ethereum blockchain got a break with the successful launch of “goblintown.wtf.” It’s an NFT collection of 10,000 goblins of fantasy lore that are considered “ugly” and little.
They can be used as profile pictures (PFPs) on social media. It was a free mint project that sparked the interest of NFT investors and the possibility of an NFT hype comeback despite the market conditions in Q2 and Q3.
Furthermore, an influx of multiple brands, celebrities, and sportspersons are joining the NFT space. Consequently, “The recent market downturn is just a temporary speed bump on the road to wider acceptance of NFTs.”
“As market sentiment improves, we will see a return in NFT trading volumes in the near future,” he adds.
Is The NFT Market Set To Recover?
But is the NFT market dead? Some experts argue that the NFT industry is still poised for growth. Several factors are driving this optimism, one being the continued adoption of NFTs by game developers and other content creators.
NFTs provide an easy way to create virtual goods and ensure ownership. This has been a huge draw for many developers who came from the web3 scene, gaming scene, or other fields of the consumer industry.
Another good news we can see is that fractionalization and increased liquidity in NFT markets can make investment easier. Some marketplaces now offer better investment alternatives which would potentially lessen the risk of greater rewards for NFTs.
Offering NFTs that can be divided into tiny fractions and traded like normal currencies. This open NFT market could potentially revitalize NFT investment and bring new life to this once-thriving industry.
We also cannot deny that world-class companies and top-tier developers have been heavily investing in cryptocurrencies, NFTs, and blockchain development at these cheap prices despite the current bear market situation.
These notable people have been strategically building and developing despite the noise and tragedies happening in the scene. They believe that we are still in the early stages of blockchain technology and that we are set to global adoption in a few years or decades. Remember that Web2 and the internet had a rough start coming into the world and Web3 may be experiencing a similar adoption curve.
While NFT markets may be currently in a bear market, many experts believe that this is just a temporary speed bump on the road to wider acceptance of NFTs.
With continued adoption by larger companies and notable investors, it seems likely that NFTs will continue to grow in popularity and play an important role in the world of cryptocurrencies.
A portion of the NFT investor sentiment believes that this phase only weeds out the “Paper hand investors” and will show the true colors of each investor, whether they would be a firm believer of blockchain technology, a diamond-handed investor, or a person who likes small immediate profits.
Whether or not NFTs are set for a full recovery remains to be seen, but with continued development, we can expect exciting things to come from the NFT industry.