In a market dominated by optimism surrounding the price surges of Bitcoin (BTC) and Ethereum (ETH), non-fungible tokens (NFTs) are seeing a notable decline in popularity. NFTs, which include digital artworks and collectibles stored on blockchains, have recently lost their appeal.
According to a Bloomberg report, Google searches for NFTs have reached their lowest levels since 2021, when these tokens first gained mainstream attention.
POPULAR NFT COLLECTIONS IN DECLINE
A significant drop in sales highlights the struggles of the NFT market. Researcher DappRadar reveals that NFT sales have declined by more than six percent to $8.5 billion in the first five months of this year, compared to the same period last year.
The drop stands in stark contrast to the industry's peak in January 2022, which saw a staggering $17.2 billion in NFT sales in a single month.
The report also notes that sentiment around NFTs hit a low last month, when the U.S. Securities and Exchange Commission (SEC) moved to approve exchange-traded funds (ETFs) that invest directly in Ethereum. In anticipation of this approval, some investors reallocated their investments to ETH, divesting from NFTs.
Nicolas Lallement, co-founder of NFT data tracker Price Floor, explains that capital turnover is common in crypto markets, with Ethereum likely to continue to attract and absorb market capital, leading to price declines for other assets like NFTs.
PRICE DROP ON NFT COLLECTIONS
This year, many popular NFT collections have seen significant price drops. NFT Price Floor reports that prices for these collections are down 40-50% since the beginning of the year. CryptoPunks, a collection created on the Ethereum network, is trading around 2021 levels and is down 29% from its low point a year ago.
Similarly, collections such as Bored Ape Yacht Club (BAYC) and Chromie Squiggle have seen their Ethereum-based price floors decline to about half of what they were at their lowest point last year.
A MARKET CORRECTION IN SIGHT
NFT collector Daniel Maegaard confirms that most NFT collections continue to decline or remain stagnant after the peak euphoria seen in 2021. Maegaard recently sold several high-profile NFTs, including works by digital artists XCOPY, Hackatao, and Coldie.
While some NFT art collections, like XCOPY’s, have seen positive returns over the past 90 days, Lallement says the overall trend points to a market correction.
MAGIC EDEN RESILIENCE
Amid the challenges facing the NFT market, the Magic Eden platform has shown resilience. According to Sara Gherghelas, an analyst at DappRadar, the platform has gained market share as trading activity on its platform has increased. Although Magic Eden saw record trading volume in April, trading activity has since declined.
In summary, the current state of the NFT market reflects a decline in popularity and price. While some individual collections have posted positive returns, the overall market sentiment suggests a continued correction in the NFT market.
At the time of writing, ETH was trading at $3,480, following Bitcoin's trend, with a sharp decline of 5% in the last 24 hours and more than 8% in the last seven days.