This strange and chaotic market is showing symptoms of slowing down a year after just one non-fungible token sold for $69.3 million in crypto at Christie’s auction house. And the buyer is paying to be recorded on a blockchain as the owner of a digital file that anybody can access online for free.
Sales on OpenSea, the largest NFT marketplace, surpassed $5 billion in January, up from $8 million the previous month, but dropped to roughly $2.5 billion last month.
According to market tracker CryptoSlam, roughly 635,000 people bought an NFT last month for $427, down from about 948,000 for 659 dollars in January.
Despite this, businesses continue to flock to the trendy “metaverse,” where digital assets such as virtual land and avatar apparel may be purchased for cryptocurrency in the form of NFTs. Businesses such as JPMorgan and HSBC have created virtual venues in NFT-based worlds this year, while YouTube and Instagram have NFT plans.
“The enthusiasm and curiosity that we had at times last year are not here anymore,” said Pablo Rodriguez-Fraile, a Miami-based digital art collector. “I believe we accomplished something that was not long-term sustainable.”
However, he said sales have picked up again in recent weeks.
They also added that investor caution following Russia’s invasion of Ukraine in late February may have reduced sales. The market was not in general decline but somewhat stabilising after its meteoric growth, according to Modesta Masoit. She is the director of finance and analytics at NFT research firm DappRadar.
“Everyone was anticipating a time of consolidation,” she added. “It isn’t going away; rather, it is consolidating.”
According to DappRadar, overall NFT sales in 2022 have totalled around $11.8 billion, excluding $19.3 billion in sales on a platform suspected of being dominated by irregular trades, where a small number of accounts move things back and forth for inflated costs.
APE TO BEAR TO BULL
NFTs are rare and hazardous creatures.
In a highly volatile market where the worth of an asset is determined by its social status, prices might collapse rapidly after an initial boom.
In contrast to the traditional art industry, the NFT market can seesaw between bull and bear cycles in as little as a week, according to Nima Sagharchi, head of digital assets at auction house Bonhams.
According to CryptoSlam, an NFT representing a piece of computer-generated abstract imagery from the Art Blocks collection would sell for roughly $15,000 at its peak in September 2021 but fetched just under $4,200 last month.
Meanwhile, NFTs from the Bored Ape Yacht Club – a set of 10,000 variations on a cartoon ape – continue to sell for roughly $300,000.
As done by celebrities such as Madonna and Paris Hilton, purchasing a Bored Ape is analogous to joining a hybrid of a members’ club and an investment plan. Buyers frequently promote their membership on social media by using their NFT as their profile photo.
ApeCoin, a cryptocurrency, was introduced last month and was initially distributed to holders of Bored Ape NFTs and the project’s founders. According to Coinbase data, it has a market cap of $3.4 billion.