Nonfungible tokens (NFT) sales are flatlining, market observers say, with average daily sales for the week of May 1 down 92 percent from the peak in September, according to data from the website NonFungible.
An average of about 19,000 NFTs sold during the week of May 1 compared with about 225,000 in September 2021.
NFTs are cryptographically unique digital tokens that are proof of ownership for various tangible items. These items can be stored digitally, such as artwork, digital collectibles, music, and items in video games.
So is this the beginning of the end of NFTs? Has the NFT speculative bubble popped?
A speculative bubble is a major increase in asset values within a particular industry, commodity, or asset class to unsubstantiated levels.
NFTs became popular in 2021 as musicians, artists, celebrities, and companies entered the NFT market. And with this, prices for NFTs surged. The artist Beeple sold an NFT tied to his artwork for $69 million. Adidas AG and Nike Inc. sold NFTs tied to their sneakers. McDonald’s Corp. sold an NFT tied to the rerelease of its McRib sandwich, The Wall Street Journal reported.
Then the number of active wallets in the NFT market recently fell 88 percent to about 14,000 from a high of 119,000 in November.
The NFT market is collapsing, The Wall Street Journal declared.
Here are three things to know.
NFT owners are discovering that their investments are now worth significantly less than when they bought them.
For example, an NFT of the first tweet sent by Twitter co-founder Jack Dorsey sold in March 2021 for $2.9 million to Sina Estavi, the CEO of Malaysia-based blockchain company Bridge Oracle. In early 2022, Estavi put the NFT up for auction and failed to get any bids higher than $14,000, which he didn’t accept.
According to Google Trends, the number of searches for the term NFT peaked in January and has fallen roughly 80 percent since then. On top of this, there is an imbalance between supply and demand. There are about five NFTs for every buyer, according to data from analytics firm Chainalysis. Some 9.2 million NFTs were bought by 1.8 million people as of the end of April, the firm said.
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Some in the NFT community were critical of the Wall Street Journal “NFT flatlining” report, denying the collapse of the NFT market and calling out the media for reporting the market decline.
“An article in the Wall Street Journal has claimed sales of nonfungible tokens (NFTs) are ‘flatlining’ — in the same week that the top five collections alone accounted for more than $1 billion in primary and secondary sales,” Coin Telegraph reported.
Coin Telegraph played down The Wall Street Journal’s findings, reporting that instead, on-chain data from Dune Analytics’ dashboard suggest that the NFT market is “still robust.”
“Blue Chip” NFTs and established brands such as the Bored and Mutant Ape Yacht Club and Azuki tokens are far outperforming art or gaming tokens, according to analysis from Tom Schmidt, a partner at venture capital firm Dragonfly Capital, which indexes NFT collections by type.
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