Bear Market or Burst Bubble?

Non-fungible tokens (NFTs) feel bad right now. Volume is down and prices are falling, including market mainstays Bored Ape Yacht Club and CryptoPunks.

The year started like a rocket, giving those planning a trip to the moon some hope that the latter half of last year was an anomaly rather than what it really was; the start of many projects on the way to zero.

Gone are the days of NFTs minting and instantly commanding multiple ETH floors. It was not a sign that we were early adopters of investments that led to generational wealth. No, it was a bubble, and that bubble has burst.

If you’ve been watching the Forkast 500 NFT index, the continued downtrend is not a surprise. Let’s take a look at the last 24 hours in the NFT market and zoom out from there to see how much the market has deflated.

In the last 24 hours, the NFT market has fallen around 0.75%. Not so bad, right?

Now let’s look at the last seven days. We are down over 7%.

After 30 days we are even lower, down over 8%.

Any guesses about 60 days? It’s hard to watch, but there you have it. We are down over 17%.

YTD we are down 9%, but if we look at the top of 2023 from January 18th through today, we can see that the NFT market is down a staggering 26%. This year’s winnings are completely deleted.

Zooming out to when the masses first got into NFTs and inflated the bubble is quite enlightening. Since the Forkast 500 index began tracking the market on January 1, 2022, the Forkast 500 is down over 88%. That means if you had invested $1000 in the top 500 NFT projects across blockchains, you would now have around $220 in NFTs today. I guess this is how your NFT wallet feels right now.

It is possible that the NFT market has bottomed out, but remember that thousands of projects were minted and earned enough funds to keep their project going for a while. They may be able to stay afloat longer, but without innovation to bring in new collectors. As the projects’ revenue from royalties disappears, it looks like the runway they built for themselves is about to run out.

An entire culture has been born around collecting NFTs, and it’s never going away. However, given how much activity there had been in the NFT space earlier this year and the fact that we are just now starting to enter another decline, this feels like NFTs still have a long way to go to fall. The question is “how low can we go?”.

During the next week, we will shed light on how big a problem washing has become, and how the space has been largely supported by them. The data may shock you.