Coinspeaker NFT Market Plunge: Understanding Factors behind 95% Asset Devaluation
The NFT market that once was a center of attraction and commanded millions is now passing the feel of a ghost town. This follows after trading volumes dropped by a whopping 97% since 2021, and 95% of NFT projects hit rock bottom to zero value.
These untold changes have left investors concerned about the future of digital collectibles. That is, as they wonder if the sudden downturn is only temporary or if the NFT market is truly headed for extinction. This situation has not only shaken the once-booming NFT industry to its core but also sparked widespread concern among traders and even mere onlookers.
NFT Market: The Craze, the Rise, and the Fall
Non-fungible tokens (NFTs) captured the hearts of many, including artists, collectors, and investors. That was at the time that digital artworks, collectibles, and virtual real estate rallied to unbelievable prices. However, the buzz died down as it soon became obvious that whatever was driving the NFT market to those heights had seen its peak. The sharp correction that followed was in no way expected, though. It led to overly significant losses for the entire assets within the market.
Last September, blockchain analyst Dappgambl reported that 95% of NFTs are worthless. Dappgambl’s analysis considered 73,257 NFT collections with a collective trading volume of around $17 billion. In the end, 69,795 of them, about 95%, did have zero market value.
Analysts attributed the dramatic collapse of the NFT market to several factors ranging from oversaturation to market manipulation and, overall, changing investor sentiment. It is widely believed that investors soon lost confidence due to the overwhelming amount of NFT offerings in the market, many of which had little or no quality and lacked basic value.
At one point, concerns were also raised about the environmental impact of NFTs. Their carbon footprint and energy consumption meant that investors who were environmental-minded began to rethink their involvement in the space.
Latest Data
Despite its scary outlook, there are few new data that suggest that the NFT market crash will not be permanent. According to Nftora data, the global market cap of NFTs surpassed $193.84 billion in January 2024. These figures mean that there is still some life to NFTs, thanks to immersive experience, trends, and various appeal of NFT projects.
Similarly, Statista forecasts that the number of NFT users will reach 16.35 million by 2028. Moreover, the crash has not stopped the market cap and revenue of the NFT market from growing.
To put the above statement into perspective, Statista data also suggests that the average revenue per user in the NFT market in 2024 is over $162. This statistic is particularly surprising for many who ever thought that NFTs may no longer be a thing.
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NFT Market Plunge: Understanding Factors behind 95% Asset Devaluation