Do I really need another picture of a monkey? The NFT market falls in August

The number of unique non-fungible token (NFT) buyers in August fell below 500,000 for the first time in a year, extending the drop in buyers to four consecutive months, according to NFT aggregation website CryptoSlam.

Due to a surge in Ethereum prices in early August, total sales rose to US$730 million from July’s US$650 million, but are still far from the year’s peak in January of US$4.5 billion.

Yehudah Petscher, NFT relationship strategist for CryptoSlam, said the NFT market has caught up with the rest of the world, as traditional markets have been hammered by concerns about rising inflation and interest rates, as well as other global developments.

“People are much more selective about what they buy and question, ‘Do I really want to buy this picture of a monkey or a cat for $500?'” Petscher said. Discard in an interview. “You used to not pause before and you wanted to buy it and you were happy about it. And now no, now you need a product. You need something more than just the image.”

NFTs are seen as a crucial component of the reimagined Internet of Web3 – where games, social media and financial services are run through decentralized applications controlled by users’ wallets – so a lagging NFT market could hinder adoption.

The previous high prices in the NFT market were unsustainable, Anndy Lian, author of the new book “NFT: From Zero to Hero,” said in an emailed response to questions. «[NFT] the environment doesn’t look too optimistic,” he said, but added that price cuts also happen when companies build new.

The merger

An event on the horizon could disrupt the NFT market further – Ethereum’s merger planned for later in September.

The merger will see the world’s second-largest blockchain, which has a market cap of just under $200 billion and accounted for nearly 70% of all NFT transactions in August, move from a proof-of-work (PoW) consensus algorithm to proof. -of-stake (PoS).

The buzz surrounding the merger saw Ethereum prices nearly double in a month to reach as high as $2,022 in mid-August. Ethereum Classic, the original blockchain from which Ethereum was distributed, also more than doubled in the same period to a five-month high of $45.51.

Both have since fallen back, with Ethereum trading at $1,587 on Friday in Asia and Ethereum Classic at $32.67.

“The merger will lead to a short-term price increase in the markets [which] will also help the NFT market in general,” said Lian, adding that the positive effect could extend for 3-6 weeks. But “I don’t think the merger will start another bull run because [macro] market conditions do not allow that to happen.”

Petscher said the merger could “introduce a little chaos” to the market.

As part of the merger, all NFTs currently hosted on the PoW blockchain must be replicated on the new PoS network to become the “official” versions of the NFTs.

OpenSea, by far the industry’s largest marketplace, announced Thursday that they will only support the PoS versions of NFT pools, but that doesn’t mean a market for the PoW versions won’t emerge, Petscher said.

“The original embossed version that was quite historic and gave birth to this scene — that’s important to me,” Petscher said, “so I’d try to collect that if I could, and I wonder if we’ll see some of them on sale. “

Déjà vu?

This situation is not without precedent. A debate emerged earlier this year surrounding the authenticity of CryptoPunks – one of the market’s leading collections with over $2 billion in sales – as the current collections are actually re-issues designed to fix a bug in the original run, now known as V1 CryptoPunks .

While the CryptoPunks’ creators, Lava Labs, initially tried to discredit the V1 collection, collectors pushed back and now the V1 CryptoPunks themselves are traded as a piece of NFT history – albeit with much smaller total sales of $75 million.

Barring the merger, Petscher said it will take a significant catalyst from outside the NFT industry to shake off the current market slump. An example would be Apple Inc. releasing its long-awaited VR (virtual reality) headset, which Petscher says has great potential for NFT integration.

He also said that significant advancements in blockchain protocols are needed to bring in more users to allow the industry to grow, as most platforms are still difficult for newcomers to navigate and fully engage.

“It’s going to take something big like that,” he said. “Unless, of course, the world changes; If the war suddenly ends and the traditional stock market starts to improve, it will lead to good times again.”

“But I don’t think anyone sees that on the horizon right now.”