NFT sales plunge – does the hype end painfully?

The number of daily NFT sales has dropped to almost 20,000 – in September 2021 it was eleven times as many with 225,000. Are the critics right who think that NFTs are a fashion phenomenon?

In the last year, there was hardly a new project that failed to incorporate NFTs into the concept. Such non-fungible tokens, that is, unique and immutable digital assets, created their own market in a short time, and projects like CryptoPunks or the NFT marketplace OpenSea boomed. But now the blockchain data from NonFungible shows how demand is falling sharply: While in the fall of 2021, more than 200,000 NFT sales were counted per day on many trading days, it is currently often less than 20,000. The NFT sale at Apecoin (APE) for Metaverse Otherside gave another positive boost over the weekend, but should be considered a one-off event. But even if the critics who saw NFTs as hype and basically as a bluff, now see themselves confirmed – the analysis of NFTs should be done in a differentiated way.

Argument number one: The number of daily NFT sales is one metric – another is the daily traded volume. And here the downturn is much less dramatic. The NFT market still frequently achieves sales close to 100 million US dollars a day and is thus at the same level as September 2021, when the biggest initial euphoria about NFTs subsided.

Argument number two: What is currently happening in the NFT market can also be interpreted as a cleanup. The historically first Twitter tweet, auctioned as an NFT in March 2021 for $ 2.9 million, found only a top bid of $ 14,000 in the current bid and therefore remained with the owner. But supposed NFT blue chips like the Bored Ape Yacht Club collection or CryptoPunks ready for a museum continue to be traded at a high level.

Argument number three: In the summer hype about NFTs a year ago, countless smaller projects came on the market, which ensured a lot of sales, but small trading volume. The disillusionment seems to be hard to get past here, because there really was a bubble popping up and NFT buyers are no longer blindly buying today.

Argument number four: The crypto market is no longer decoupled from macroeconomic developments. The tech index Nasdaq Composite has fallen about 23 percent compared to November 2021, Bitcoin (BTC) has even fallen 43 percent. Such trends also affect the NFT market.

Argument number five: Until now, some technical knowledge was usually required for the safe purchase and storage of NFTs. An NFT marketplace for the US cryptocurrency exchange Coinbase, which has been announced since October 2021 and on whose waiting list more than four million people have entered, is supposed to bring mass adoption.

The NFTs division separates the chaff from the wheat

Research from business magazine The Wall Street Journal reveals that big names and mature art projects using NFTs continue to pull in. For example, pop artist Jeff Koons, whose works have previously achieved record prices worldwide, now easily sells shares of a sculpture like NFTs for $ 2 million apiece. The sculpture is to be shot literally for the month later. Chinese Cai Guo Qiang also produces volatile, explosive art whose NFTs combined with digital fireworks sell well. In the music genre, for example, the band The Crystal Method is auctioning off NFTs that come with a backstage pass, dinner and singing rights. In the film, director Kevin Smith plans to offer 5,555 NFTs, guaranteeing exclusive access to his next film.

There are indications that it is becoming clear which NFTs will develop sustainable value. In addition to high quality workmanship (craftsmanship), this always clearly includes the linking of additional privileges that the Bored Ape Yacht Club has shown. But half-baked projects like Pixelmon have been swept off the market, which can be painful for early investors.

Conclusion: The NFT market is consolidating – investors should research carefully

Anyone who specializes in altcoins trading knows the basics: In order to select from the abundance of new cryptocurrencies those that are successful in the medium and long term, you need to do your own research. If concept, team and practical implementation result in a convincing overall package, the chances are much better than with new releases, which provide more questions than answers right from the start. In many ways, this seems to be repeating itself in the NFT market. The decline in daily NFT sales is actually massive. However, the NFT top segment maintains trading volume at a high level and also produces new professional projects that differ significantly from amateur trials. So if you want to implement systems using NFTs now, you should definitely take the time to check the project yourself before making a purchase.

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