The NFT industry was hit hard in March with a 31% drop in revenue
Despite the broader crypto market being positive in recent days, the NFT industry has been hit by a sharp decline in revenue across the board.
In accordance CryptoSlam, NFT’s sales volume fell by nearly 31% since last month. This has been in stark contrast to the crypto market which recovered lost ground from a disastrous 2022.
Although several major developments around NFTs should have helped sentiment around the asset, as a new asset class, there is still doubt as to whether there is actual utility behind the technology.
For now, let’s take a look at the dire situation the NFT industry is in.
It does not look good for the NFT industry
The current data suggests that the industry will struggle in the short to medium term. When it comes to blockchains, Ethereum still leads the market in sales and transactions. Collectively, Bored Ape Yacht Club is still the market leader with sales of 38 million dollars.
Despite this, the market seems to be in free fall at the moment. Data from Discard 500 NFT index shows a decrease of 4% in the last month. Buyers of NFTS also fell by a significant margin since last month, falling 34% to its current value of 1.3 million. Total transactions have also decreased by 22% to 5.7 million
Nevertheless, there seems to be a trend in the NFT market. The Ethereum blockchain, while still the number one chain to trade and create NFTs on, has seen a significant drop in almost every metric. Other “smaller” blockchains such as ImmutableX, Polygon, Solana and Arbitrum all saw large jumps in transactions.
However, it should be noted that Polygon is a layer 2 platform built on top of the Ethereum blockchain. The jump in transactions on L2 may not reflect the overall metrics of its parent L1 chain.
Crypto total market cap retains peg on the $1.14 trillion level on the daily chart at TradingView.com
How this would affect the NFT sector
These recent developments in the NFT market will certainly affect the rate of adoption of non-fungible tokens as both a form of asset and technology. However, the rising metrics for the smaller blockchains reveal that investors are diversifying away from NFTs minted on the Ethereum blockchain.
For NFT investors, the market may experience pain in the short to medium term. Investors and traders should then diversify into the smaller blockchains with increasing transactions, as this is where they will make the most of their money.
– Featured image from Getty Images
