Pundits say crashing floor prices and sell volume signal that ‘the NFT market has died’
Nonfungible tokens (NFTs) dominated crypto and mainstream media headlines all throughout 2021 as investors who held CryptoPunks and other projects minted prior to 2018 were finally rewarded for their patience. Meanwhile, newer projects like the Bored Ape Yacht Club and Art Blocks Curated saw some of their rarer pieces sell for millions of dollars.
Despite the million-dollar sales for select one-of-a-kind NFTs and the record-breaking sell volumes on marketplaces like OpenSea, data shows that a majority of the lower-priced NFTs and lesser-known projects in the market do not accrue value and this means that the sector is rather illiquid. Using data from OpenSea, a recent report from Bloomberg found that 73.1% of NFT assets had only one transaction in the past 90 days.
The data is concerning, given that investors looking to buy NFTs on average pay well above $100 to mint a new NFT and cover the gas needed to transfer the asset.
Chromie Squiggle #7583 has been sold for 922.5 ETH ($2.8M USD), after being bought for 0.25 ETH ($750) 8 months ago. pic.twitter.com/E3BfGZjlOJ
— Farokh.eth (@farokh) September 21, 2021
In comments to Bloomberg, Gauthier Zuppinger, the COO of Nonfungible, said that “maybe 90% of collections minted today are totally useless and meaningless.”
Regarding ‘successful’ NFT investing, Zuppinger:
“Ninety-nine percent is about being in the right circle, having the right information at the right time. In the NFT space, you live with this constant frustration that you have missed a chance to make $1 billion.”
Related: Sorare scores $680M funding led by SoftBank to grow its NFT sport portfolio
‘The NFT market has died’
Further evidence that the NFT sector has cooled off significantly from its August highs can be found in the number of sales being transacted on marketplaces.
According to data from Nonfungible, the number of daily sales across all NFT marketplaces has declined from a high of 138,109 on Aug. 30 to 42,372 on Sept. 21.
A similar chart pattern is seen across multiple NFT marketplace metrics including the dollar value of sales completed, active market wallets, primary market sales, secondary market sales, unique buyers and unique sellers.
These market developments caught the attention of podcast host and Twitter user Dennis Porter, who thinks the latest data coming out of the NFT space suggests that “the NFT market has died.”
As I’ve been predicting (despite getting intense backlash from everyone including bitcoiners) the NFT market has died.
Average price of NFTs have dropped over 99%. Liquid death has come. Sorry not sorry for calling this market a scam.
Pump and dump completed. pic.twitter.com/VbqnJbclh9
— Dennis Porter (@Dennis_Porter_) September 20, 2021
For the activity that is still occurring in the market, “the most actively traded 3% of collections accounted for 97% of all dollar volume,” according to Bloomberg, suggesting that the NFT market is behaving a lot like the wider altcoin market where a small percentage of the tokens receive a majority of the trading volume.
Overall, these developments suggest that the most recent bull cycle for the NFT sector could be coming to an end and that it could take some time before the liquidity in the NFT market sees a meaningful increase, especially with the recent downturn in the wider market.
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