Last week, mainstream media was abuzz with the revelation that approximately 95% of non-fungible tokens (NFTs) are worthless. However, those well-versed in the NFT domain weren’t surprised. With seasoned insights into market dynamics, they’d witnessed the cyclical nature of the NFT industry.
During hot market periods, which typically last a few weeks (or even months at the start of the year), NFTs experience a surge in value. But, as these cycles end, most NFTs become illiquid, only to be overshadowed by fresh releases in the subsequent process. Hence, the assertion that roughly 95% of NFTs plummet in value between processes is hardly a shock. Moreover, as the NFT supply burgeons, this percentage is set to escalate.
However, a larger story overshadows this “95% worthless” angle: the evaporation of nearly 94% of the market’s value. Consider this: would the performance of a few underwhelming stocks represent the entire stock market’s health? Not. Similarly, assessing the top 500 NFT collections (analogous to the S&P 500 for stocks) offers a more accurate reflection of the NFT market’s vitality. And according to this metric, the NFT domain has witnessed a staggering 94% dip since its zenith in 2022.
Despite this decline, perspective is essential. Comparing data from 2020 with the yet-to-conclude 2023, we observe a tremendous uptick in unique buyers (10,100%), sales (31,837%), and total transactions (52,304%). However, trade profits have plummeted by a whopping 64,999%. Yet, most aficionados haven’t exited the NFT arena. The overarching sentiment remains bullish about NFTs’ transformative potential.
Indeed, there’s a paradigm shift in the discourse around NFTs. While the NFT ecosystem’s value has diminished from its apex, its revolutionary potential remains intact.
A snapshot from last week reveals a stabilization trend in the NFT market. Sales figures closely mirror the activity levels of May- June 2021. The imminent milestone is reaching the early 2021 sales bracket of US $ 30 million to US $ 55 million.
In recent developments, notable NFT collections, including DraftKings, DMarket, Gods Unchained, and Sorare, dominated the sales charts, accounting for roughly 30% of the previous week’s total NFT trade volume. Meanwhile, Ethereum retained its crown as the NFT kingpin, overshadowing combined sales from the other top ten collections, totaling just above US$38 million.
Lastly, while new proposals like changes to the Bitcoin Ordinals numbering system stir debates, one fact remains evident: the NFT realm, with its ups and downs, continues to captivate enthusiasts globally.
