Once in full swing non-fungible token (NFT) is down almost every trackable metric. In sectors from art to gaming, NFT trading volume across all sectors has fallen by around 90% since this time last year, according to data from crypto websites The Block and CryptoSlam.
It’s a steep drop for an NFT industry that has seen several weeks of billion-dollar trading over the past few years as traders, speculators and collectors compete for coveted digital collectibles in order to make a profit, gain status and show off.. Since early September, NFT trading volumes have averaged $35 million per week. In a weak stock market and high inflationthe market showed no signs of rebounding.
What the industry calls a crypto “winter” has settled in the once-hot market that has seen the rise of Yuga Labs, Dapper Labs, and OpenSea, multiple billion-dollar companies. NFT market difficulties are another sign that blockchain-based digital collectibles are a bullish luxury rather than a trustworthy one, inflation-rresilient investments.
Everything is down
NFTs are down across the plank. In the NFT game industry, known for its online game titles such as Axie Infinity and raging gods, sales are down 93% year over year. NFTs are used in games to confer ownership of different playable characters or usable items.
In the art and collectibles category, including popular NFT collections such as CryptoPunks and Bored Ape Yacht Clubtrading volumes are down more than 80% from a year ago, and 94% from their peak this spring.
Many of these art NFTs are bought and sold on OpenSea, the largest peer-to-peer marketplace. Trading volume on the platform fell from around $3 billion in September 2021 to $350 million in September 2022, an 88% drop, according to third-party data from The Block.
In a recent blog post about the recession, OpenSea CEO Devin Finzer urged patience with emerging technology and wrote that the “The promise and long-term trajectory of NFTs” is one where the “addressable market…is essentially every person on the planet.” (Finzer’s vision is still a long way off: half of Americans I haven’t even heard of NFTsaccording to a recent Pew study).
Venture capitalist Li Jin also argues that today’s NFT crash, although driven by macroeconomic headwinds, will lead to a better and more utility NFT market in the future. “For me, the downturn also highlights the main opportunity I see around NFTs, which is to move them from assets that people collect and speculate on, to assets that people actually use,” she wrote in an email.
Jin, general partner at investment firms Atelier Ventures and Variant, predicted that NFTs will have more popular use cases in the future, such as representing one’s digital identity (so-called “soulbound” NFTs), securing voting rights or membership in decentralized communities, and tracking in-game assets.
In the meantime, says Mahesh Vellanki, managing partner of crypto-venture firm SuperLayer, this “major fix” will wreck numerous NFT projects before preparing the ground for a industry recoveryespecially on newer blockchains such as Solana. “The biggest story here is not so much that NFTs are down, but that the market for them is changing,” Vellanki wrote in an email.. “We’re seeing more competition and, therefore, more creative projects being built on a wider variety of channels.