An article in the Wall Street Journal about a study by the NFT market analysis platform Nonfungible makes the claim that the entire NFT market is on the verge of collapse. They came to this conclusion because there has been a 92 percent drop in NFT sales since September 2021.
What happens? These three words could summarize the current coverage of the NFT market. For the moment, there are almost crowded reports talking about a collapse of the NFT market. How surprising these reports are becomes especially apparent if one only looks at the last four weeks. Here it was also reported that the growth figures from the NFT market significantly exceed the development of cryptocurrencies in terms of value. But now everything looks different.
So there was a huge plus of 103.7 percent, which is something to be proud of. How clearly this growth is compared to Bitcoin as a cryptocurrency, for example, is shown by its previous performance in 2022. Bitcoin was only 1.9 percent.
NFTs, what are they really?
The term “NFT” stands for “Non-Fungible Token”. And a token is proof of ownership in the digital world of cryptocurrencies and blockchain networks. So an NFT is a non-replaceable proof of ownership in the crypto world, a deed or a certificate of authenticity, so to speak.
This clear proof of ownership is important for trading in the virtual world of Metaverse. Without this, digital products could simply be copied and thus duplicated, which would make these digital goods unattractive to retailers.
Fall in the NFT market inevitable
It is not surprising that the NFT market may collapse. After all, all financial values and assets are currently under some pressure due to high inflation in Europe and the United States. Which is being driven more and more by the pandemic and the Ukraine war. But if you look more closely at the figures from the NFT market, a different picture emerges with regard to the current reporting.
Despite weaknesses, the NFT market is robust
The current reporting was triggered by an article in the Wall Street Journal. Referring to data from the NFT market analysis platform Nonfungible, this article concludes that there has been a 92 percent drop in NFT sales since September 2021. Active wallets from the Ethereum NFT market have also fallen by about 88 percent, according to Nonfungible.
Both references are scary to read. But you have to see the starting position. In September 2021, it was at a record high level, a record high NFT sales. But that is not the only weakness in the report from NFT’s market analysis platform Nonfungible. Although there has been a decline, the NFT market is currently proving to be very robust.
It also appears from the figures from OpenSea, the NFT marketplace. In the last few days alone since May 1, there have been sales of around 550 million euros. This is also supported by the Solana NFT project Okay Bears. Although sales here were lower than compared to OpenSea, it still reached around $ 47 million in the same period.
The various trade numbers also indicate that the NFT market analysis platform Nonfungible has not taken all transaction numbers into account. Which is also not irrelevant in terms of the outcome of whether the NFT market is doing well or poorly.
Growth rates of up to 81 percent
The individual NFT projects also show that the NFT market as a whole is robust. If you look at the NFT projects that are particularly popular, growth rates of up to 81 percent were registered here. Elsewhere in the NFT market, primarily arts and games, there has been a decline of between 39 and 49 percent.
And even with these numbers, one has to look closer to be able to classify them correctly in the end. In gaming, the game P2E gameAxie Infinity reached $ 40 million in November 2021. It reached an all-time high.
This trend continues: BAYC, Azuki, CloneX, Doodles & now Moonbirds that are different from everyone else.
I’ve talked about doing better than big capital companies, but it’s really top-5 projects that drive all the profits. pic.twitter.com/UsUlwHMJ9M
– NFTstatistics.eth (@ punk9059) April 26, 2022
Development of individual NFT projects
Looking at the development now, there is not much left with the P2E gameAxie Infinity and the $ 40 million. Meanwhile, this comes to only $ 500,000. A 39 percent drop quickly counts when a good $ 39.5 billion is gone in just one game within a few months.
The development of the individual NFT projects and the value stability are therefore significantly different. And there are weaknesses in value stability for another reason. While value stability issues are most evident in some art and gaming projects, which have fallen in value by as much as 41%, and some digital real estate.
come on man pic.twitter.com/CTJFldAHNk
– Tom Schmidt (@tomhschmidt) May 3, 2022
Here especially with Decentraland or Sandbox, which can hardly be assessed realistically in terms of value. At present, major uncertainties are inevitable. Looking at the message from the entrance again, one can conclude that the NFT market is about to collapse. This can be seen in the analysis at another weak point, namely when individual areas cannot be assessed reliably at all.
On the other hand, the top 10 in the NFT industry are still on an upward trend, these blue chips in the NFT industry have again increased in value by 81% since the beginning of 2022. In no case can one talk about a collapse here.
There is clearly a trend right now that five or six of the best performing projects are doing significantly better, while the rest are just about to fall.
the future is uncertain
The development in the first few months of 2022 shows in particular that the NFT market can not be said to have collapsed. On the contrary, it is very clear that there has been a shift and, if at all, only small declines in some areas. If you remind yourself here that the NFT market was still at a record high level in September 2021, the NFT market is still in good development.
In the current uncertain times, there must be a big question mark over whether this will be the case in the long run. The longer the pandemic, the war and the associated inflation continue and even increase, the more likely it is that a decline in the NFT market cannot be ruled out.
Keep an eye on the current situation
In addition, it will also depend on factors such as new developments and innovations that must come from artists, creators and developers. But the industry itself must also question why the NFT market is collapsing. The current reporting certainly does not encourage many new interested parties to invest their money in the NFT market or expand their financial commitment.
This is all the more critical when it turns out that the analysis on which the current reporting is based has significant shortcomings on several points. Confidence in current values is important, especially when investing in the NFT market. Inaccurate reporting can also artificially trigger a crisis in the NFT market.
@DJohnson_CPA suggests that AxieInfinity was so large that the dominated number in November and since then has collapsed. Seems possible.
From where I sit, this is a very different message than “NFTs are collapsing” https://t.co/lq66GbhbAj
– NFTstatistics.eth (@ punk9059) May 3, 2022
Conclusion on the non-fungible report
The NFT market is much more volatile than the rest of the crypto market. Large areas of the NFT market deal with collectibles from the areas of art, sports and general collectibles, here values and prices are determined by the collector’s passion and taste of the day. Just like in the real art and collector market, there are also random changes in collectors’ behavior on the digital counterpart. What is still coveted and expensive today may be unattractive and almost worthless tomorrow.
No one will claim that the entire art market will collapse when the works of art of individual artists are no longer in demand and lose value. The same is true of the NFT market. There will always be extreme fluctuations in value, but money will continue to be made and a lot will continue to be invested throughout the market.