The market for non-fungible tokens (NFTs), which used to grow quickly, has gone down in almost every way that can be seen. The Block and CryptoSlam, two websites about cryptocurrencies, say that since this time last year, the number of NFTs traded has dropped by nearly 90% in all fields, from gaming to the arts.
That’s a big drop for the NFT market, which had many $1 billion trading weeks in the past few years as traders, speculators, and collectors competed to get wanted digital artifacts to make money, improve their status, and show off their collections. Since the beginning of September, the average amount of NFT trades per week has been $35 million. Even though the stock market is weak and inflation is high, the market hasn’t shown any signs of getting better.
Nothing seems to work.
All around, the number of NFTs is going down. Sales in the NFT gaming sector, which is known for online games like Axie Infinity and Gods Unchained, are down 93% from last year. In video games, NFTs are used to give ownership to different characters or things that can be used.
Trading volumes in the art and collectibles sector, which includes well-known NFT collections like CryptoPunks and Bored Ape Yacht Club, are down more than 80% from a year ago and 94% from their high this spring.
Many of these art NFTs are bought and sold on OpenSea, the best-known peer-to-peer market. Independent data from The Block shows that the amount of trading on the platform has dropped by 88%, from almost $3 billion in September 2021 to $350 million in September 2022.
In a recent blog post about the slump, OpenSea CEO Devin Finzer urged people to be patient with the developing technology. He said that the “long-term promise and trajectory of NFTs” is that “the addressable market is almost everyone on the planet.” Finzer’s dream is a long way off. A recent Pew study found that only half of Americans have even heard of non-financial transfers (NFTs).
Li Jin, a venture investor, says that even though the current drop in NFT prices is caused by macroeconomic problems, it will lead to a better and more useful NFT market in the long run. She wrote in an email, “The downturn shows me that the biggest chance I see with NFTs is to turn them from assets that people collect and speculate on into assets that people actually use.”
Jin, a general partner at the investment firms Atelier Ventures and Variant, predicted that NFTs would become more popular in the future for things like representing one’s digital identity (so-called “soulbound” NFTs), proving voting rights or membership in decentralized communities, and keeping track of in-game assets.
Mahesh Vellanki, managing partner at the cryptocurrency venture firm SuperLayer, says that in the meantime, this “big downturn” would wipe out many NFT ventures before laying the groundwork for an industry rebound, especially on newer blockchains like Solana. In an email, Vellanki said, “The main story here isn’t so much that NFTs are going down, but that the market for them is changing.” Because there is more competition, a wider range of chains are coming up with more creative ideas.