- NFT collectors are downsizing their collections to avoid losses amidst the prevailing bear market.
- The NFT market trade volume has declined over 81% since its peak in January 2022.
- Scams, collapses, and low interest are some of the factors that have soured investors’ interest in the market.
The NFT market may be facing its worst days yet, with NFT collectors and investors packing up and leaving amidst plunging trade volume, collapses, and gradual erasure of NFT royalties, per a Bloomberg report. According to the post, NFT collectors have, in recent months, been downsizing their collections to avoid heavy losses.
The NFT market, which peaked in 2022, has been severely hit by the ravaging and prolonged market slowdown. Referencing interviews with notable collectors, the post said the NFT market has lost its endearing value.
Between January 2022 and July 2023, trading volume for NFTs has dropped over 81%, per data from DappRadar. Likewise, monthly NFT sales have plummeted by 61%, forcing NFT creators, investors, and companies into desperation.
Recently, OpenSea announced it had made royalties on secondary sales, reneging on its promise after fierce competition from other NFT marketplaces. As a result, the platform faces threats of NFT creators abandoning the platform.
According to a collector, the NFT space has lost the hype that raked in users and investors in its early years. The FOMO, which peaked in 2022, has now switched to soured investor sentiments, influencing desires to own the digital pieces.
Not only that, the report also mentioned the regulatory clampdown on crypto assets. Recently, the SEC made its first enforcement action against NFTs. According to the report, that has also influenced market sentiments towards digital collectibles.
Furthermore, the high rate of NFT scams and collapses in the market has also discouraged users. Not only do holders face threats from hackers but also from NFT creators who may decide to run the project down overnight.
As noted in the post, floor prices of blue-chips NFTs like the BAYC and CryptoPunks have tanked, currently sitting at two-year lows. Additionally, Yuga Labs, which owns the two collections, faces revenue threats with several marketplaces discontinuing NFT royalties.
However, NFT art continues to see moderate demand, especially works from popular digital artists. Also, low-value NFTs used in games are also seeing demand from users.