NFT sales reached low for 12 months after cryptocurrency crash | Non-fungible tokens (NFTs)
Non-fungible tokens have been swept up in cryptocurrency crashes when sales reached a 12-month low in June.
NFTs give ownership of a unique digital element – often a piece of virtual art – to someone, even if that item can be easily copied. Ownership is registered in a digital, decentralized ledger known as a blockchain.
Sales of NFTs totaled just over $ 1 billion (£ 830 million) in June, according to cryptanalysis firm Chainalysis, their worst performance since the same month last year when sales were $ 648 million. Sales peaked at $ 12.6 billion in January.
“This decline is definitely related to the broader decline in the crypto markets,” said Ethan McMahon, a chainalysis economist.
“Times like this will inevitably lead to consolidation in the affected markets, and for NFTs we are likely to see a pullback in terms of collections and the types of NFTs that become prominent.”
The cryptocurrency market, worth around $ 3tn in November last year, is now worth less than $ 1tn.
NFTs rely on a blockchain – the decentralized ledger that was first used by bitcoin to track ownership of the cryptocurrency – to register who owns them and let them trade. Most are based on the Ethereum blockchain, which is maintained through a carbon-intensive system called proof of work.
At its peak, the NFT market attracted large sums including $ 2.9 million for a sign of the first tweet from Twitter co-founder Jack Dorsey. A digital collage by visual artist Beeple sold for $ 69 million; the main symbol of the “play to earn” video game Axie Infinity achieved a total value of $ 9.75 billion; and Coca-Cola raised more than $ 575,000 from the sale of digital items as a custom jacket to be used in the metaverse.
According to the Chainalysis data, NFT sales peaked in January. In April, an attempt to sell on Dorsey NFT was abandoned when bids peaked at $ 14,000.
However, demand for so-called blue chip NFT collections has kept pace, according to DappRadar, a company that tracks NFTs and blockchain-based video games.
The price of the cheapest NFT in the Bored Ape Yacht Club has fallen by just 1%, to $ 90,00o, over the past month, according to DappRadar’s head of research, Pedro Herrera. “Blue chip collections give much better results than most NFTs,” he said.
NFT sales reached $ 40 billion last year, and the total for 2022 has already exceeded it, by more than $ 42 billion, according to Chainalysis. Sales in January and February accounted for more than half of the total in 2022 so far.
The cryptocurrency market has come under pressure due to volatility in the broader equity markets, amid fears of rising inflation and higher interest rates, which have dampened appetite for more risky assets, including technology stocks and digital assets.
Belief in cryptocurrencies has also been shaken by the collapse of Terra, a so-called stablecoin whose value was supposed to be linked to the US dollar, and problems with crypto-related financial institutions such as Celsius Network, a lender that has stopped. outlet.
