Despite facing numerous challenges and fluctuations in 2024, NFTs (non-fungible tokens) still hold an indispensable position in the Web3 space. Although media and analysts often claim that NFTs have 'died', market data indicates that the unique value and market demand for NFTs continue to grow. According to data tracker CryptoSlam, NFT sales in 2024 amounted to approximately $8.5 billion, though below the peaks of previous years, the number of buyers saw a 62% increase, reaching 7.5 million. This growth indicates that the demand for NFTs remains robust in certain aspects.
Challenges and downturn in the NFT market in 2024
The turmoil in the NFT market began in early 2024 when the social media platform X (formerly Twitter) announced it would discontinue support for NFTs, disappointing many NFT projects and their holders. This move was seen by some community members as the 'last straw' for NFTs, viewing it as another major setback for the industry's development. In the same month, renowned video game retailer GameStop also announced the closure of its NFT marketplace due to the unclear regulatory environment in the U.S. Additionally, U.S. gaming company DraftKings closed its NFT business due to 'legal developments'. That year, blockchain platform Immutable and cryptocurrency exchange Kraken also exited the NFT market. The most shocking news came from Nike's NFT project RTFKT, which announced it would cease operations in January 2025. This series of exits marked the difficulties faced by the NFT industry, while the SEC's attention on NFT projects further exacerbated this uncertainty.
Regulatory pressure from the SEC: Challenges for NFT projects
In August 2024, the SEC issued a Wells notice to the NFT platform OpenSea, alleging that NFTs on its platform might constitute unregistered securities. A Wells notice indicates that regulators believe a project may violate securities laws, making compliance issues a hot topic in the NFT industry. NFT creators and platforms have expressed concerns about regulatory pressure, believing such actions may stifle innovation and negatively impact artists and creators. In December, another NFT platform, CyberKongz, also received a Wells notice from the SEC, alleging that its Genesis Kongz NFTs sold in 2021 violated securities laws. These regulatory challenges have put unprecedented pressure on the NFT industry in 2024.
The recovery of the NFT market and future potential
Despite the NFT market experiencing a seven-month downturn in 2024, signs of recovery began to emerge in the second half of the year. In October, market sales grew by 18%, reaching $356 million, and further climbed to $562 million in November, marking the highest level in six months. Notably, on the Solana platform, NFT sales surpassed $6 billion, demonstrating strong performance in certain blockchains within the NFT market. As for 2025, the future of the NFT industry is full of uncertainties. Some industry experts believe that NFT technology will extend beyond digital art and collectibles to practical applications such as identity verification, ownership records, and medical health documents. Jana Bertram, Strategic Director of the RARI Foundation, stated in an interview that the potential of NFTs is far from fully tapped, and with technological advancements and application expansions, NFTs may usher in a new growth phase. Additionally, Lennix Lai, Global Chief Business Officer of OKX, pointed out that trading volume for Bitcoin NFTs (Ordinals) grew by 55% from October to November 2024, indicating the recovery and expansion potential of the Bitcoin NFT market. As more creators publish their works on the Bitcoin blockchain, the prospects for NFTs on Bitcoin are increasingly promising.
Outlook for the NFT market in 2025: Growth and innovation coexist
Despite experiencing a brief downturn, the future of NFTs remains full of opportunities as the Web3 space expands and the cryptocurrency market grows. Yat Siu, Executive Chairman of Animoca Brands, stated that with the growth of the cryptocurrency market, the NFT market is expected to see a revival in the coming years. He noted that as the cryptocurrency market further develops, the trading volume of NFTs may increase significantly, with the entire cryptocurrency market expected to reach a market cap of $10 trillion by 2026, benefiting the NFT market as well.
Conclusion
Although the NFT industry faced significant challenges and fluctuations in 2024, its unique value and potential continue to attract the attention of numerous investors and creators. With technological advancements and market recovery, NFTs may return to the market with a fresh outlook in the future, especially with innovative applications on platforms like Bitcoin and Solana worth noting. For NFT supporters, 2025 could be an era filled with growth and innovation.
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