The NFT market is down by almost all metrics
The once-booming non-fungible token (NFT) market has declined by almost every traceable metric. In sectors from art to gaming, trading volume for NFTs across all sectors has plunged by roughly 90% since this time last year, according to data from crypto websites The Block and CryptoSlam.
It’s a steep fall for an NFT industry that recorded several $1 billion trading weeks in recent years as traders, speculators and collectors scrambled to get their hands on coveted digital collectibles to make money, gain status and show off. Since the beginning of September, NFT trading volumes have averaged $35 million per week. In the midst of a weak stock market and high inflation, the market has shown no signs of picking up again.
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What the industry is calling a crypto “winter” has settled on the once red-hot market that saw the rise of Yuga Labs, Dapper Labs and OpenSea, multi-billion dollar companies. The NFT market’s struggles are yet another sign that blockchain-based digital collectibles are bull market luxuries rather than reliable, inflation-resistant investments.
Everything is down
NFTs are down across the board. In the NFT gaming industry, known for online gaming titles such as Axie Infinity and Gods Unchained, sales are down 93% year-on-year. NFTs are used in games to grant ownership of various playable characters or usable items.
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In the art and collectibles category, including popular NFT collections like CryptoPunks and Bored Ape Yacht Club, trading volumes are down more than 80% compared to a year ago, and 94% lower than their peak this spring.
Many of these art NFTs are bought and sold on OpenSea, the most prominent peer-to-peer marketplace. Trading volume on the platform has fallen from around $3 billion in September 2021 to $350 million in September 2022, a drop of 88%, according to third-party data from The Block.
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In a recent blog post about the downturn, OpenSea CEO Devin Finzer urged patience with the new technology, writing that the “long-term promise and trajectory of NFTs” is one where the “addressable market … is basically every single person on the planet.” (Finzer’s vision is far from over: Half of Americans still haven’t even heard of NFTs, according to a recent Pew study).
Venture capitalist Li Jin also argues that today’s NFT crash, while driven by macroeconomic headwinds, will lead to a better and more utilitarian NFT market in the future. “To me, the decline also highlights the big opportunity I see around NFTs, which is to take them from assets that people collect and speculate on, to assets that people actually use,she wrote in an email.
Jin, a general partner with investment firms Atelier Ventures and Variant, predicted that NFTs will have more popular use cases in the future such as representing one’s digital identity (so-called “soul-bound” NFTs), securing voting rights or membership in decentralized societies, and tracking of in-game assets.
In the meantime, says Mahesh Vellanki, managing partner at crypto venture firm SuperLayer, this “major correction” will wipe out many NFT projects before setting the stage for an industry recovery, especially on newer blockchains like Solana. “The bigger story here is not so much that NFTs are down, but that the market for them is changing,” Vellanki wrote in an email. “We are seeing more competition and in turn more creative projects being built on a wider range of chains.
