NFT losing mojo: NFT trading volume is down 97% since January
After the initial excitement and hype, the Crypto market is facing an unprecedented downturn, resulting in hundreds of thousands – if not millions – of crypto enthusiasts collectively losing billions of dollars. The scenario with the NFT market and NFT enthusiasts is also no different.
Although the NFT market’s trading volume went through the roof in the first quarter of the year, the bearish market trends that deepened in the second quarter have only fallen further in the following months.
According to the latest data from Dune Analytics, the global NFT trading volume is down 97% after zooming to an all-time high in January 2022. The pattern suggests a worrying scenario for investors and entrepreneurs involved in the NFT market.
In January of this year, NFT trading volume reached a record high of $17.2 billion, resulting in investors rushing to invest in startups in the Blockchain space.
But in September 2022, the scenario changed upside down, which could be understood from the nose-diving trading volume. According to Dune Analytics, only $466 million worth of NFTs were traded in September.
Non-fungible tokens (or NFTs) are cryptographic assets stored on a blockchain with unique identifiers and metadata that distinguish them from one another.
They cannot be traded or exchanged like cryptocurrencies. This is different from fungible tokens like cryptocurrencies that can be traded or exchanged for equivalence.
The severity of the situation in the Crypto market can be understood from the fact that over 2 trillion dollars have gone down the drain, and NFTs are a significant part of it.
The global NFT market is experiencing rapid selling as investors avoid riskier assets and global monetary policy becomes more restrictive. Experts believe that investors are less likely to invest in risky assets in the market due to the recent rise in interest rates. NFTs are no exception.
The uncertainty in the leading markets is another reason for the record decline in the NFT and crypto market. For example, the Crypto market in India, which is one of the leading markets for Crypto and NFT, is dormant now.
Last week, we reported on the nosebleed trading volume of India’s crypto market. India is one of the leading crypto markets in the world. Crypto enthusiasts are no longer willing to take the risk of betting on Crypto at least for now.
One of the main reasons behind the disappointing performance of NFT trading in India is the new tax policy introduced by the government. 1% TDS on VDA (Virtual Digital Assets) which includes NFT and Crypto which came into force from 1st July has adversely affected the market. Traders as well as investors are disheartened by the reduced profits due to the new tax policy. The uncertainty surrounding the regulation of Crypto and NFT is another factor affecting the market.
The global economic uncertainty, the possibility of the longest recession that could be around the corner and the geopolitical imbalance due to the war between Ukraine and Russia are some of the reasons behind people’s decision to maintain their distance from the crypto market.
