In the vibrant legion of cryptocurrencies, where Bitcoin and Ethereum have been basking in the glory of their high-value spikes, their lesser-known cousin – Non-Fungible Tokens (NFTs) – is facing a marked ebb in its appeal. The digital universe of NFTs, encompasses an intriguing array of virtual art pieces and collectibles, recorded and secured on blockchain networks, but the charm of owning these distinctive tokens seems to be waning.
Recent data from tech giant Google points to this grim reality, with the search volume for NFTs plummeting to the lowest since 2021, the year that marked their debut in the mainstream financial milieu. Concurrently, the NFT market, which has found favor among investors for their distinctiveness, has witnessed a dip in its sales figures as well.
Enlightening data provided by DappRadar, a prominent digital assets researcher, illuminates this trend, citing a decrease of over six percent in NFT sales amounting to a staggering $8.5 billion, dissecting the figures of the first quintile of this year against the corresponding period last year.
The current decline in NFT popularity and sales reveals an enormous contrast from the zenith captured in January 2022, when a phenomenal $17.2 billion worth of NFT sales was recorded, punctuating the peak of the NFT market.
This fall from grace was accentuated when the US Securities and Exchange Commission recently initiated steps to greenlight exchange-traded funds (ETFs) that would directly invest in Ethereum. This critical legislative move ignited a shift in investors’ preference, leading many to reallocate their money from NFTs to Ethereum, thus adding fuel to the fire.
Nicolas Lallement, co-founder of NFT Price Floor, a reputed tracker of NFT market data, was of the opinion that such capital rotation was customary in the volatile world of crypto markets. In this delicate dance of finances, Ethereum continues to lead, drawing significant market capital that in turn, triggers a downfall in prices for other entities like NFTs.
The repercussions of Ethereum’s emerging popularity are evident in the NFT market, with renowned NFT collections being hit by substantial price reductions, slashing values by 40 to 50 percent since the beginning of the year. The iconic CryptoPunks, a distinct range of digital creations minted on the Ethereum network, have seen a sharp plummet of 29 percent from the previous year’s lowest point and are now trading at levels reminiscent of 2021.
An equally grim scenario is also unfolding with other NFT collections such as Bored Ape Yacht Club (BAYC) and Chromie Squiggle. Their price floors, calculated based on Ethereum, have halved compared to those recorded at the lowest point last year.
However, not all beams in the edifice of the NFT market are eroding. Amidst the tumult, the NFT marketplace Magic Eden has been holding its ground steadfastly. As per Sara Gherghelas, an analyst from DappRadar, the platform has seen an uptick in market share and trading activities, a testament to its resilience. Unfortunately, despite recording the highest ever sales volume in April, trading activities on Magic Eden have since been on a downtrend.
At present, the NFT market is traversing through a challenging phase, underscored by a decline in popularity and value. The overall sentiment suggests a continuing market correction, although a few collections have managed to yield positive returns. As of now, ETH, which is a key player in the NFT value determination, is showing a downward trend, sending ripples of concern through the NFT market.
