The NFT market has been caught up in the ongoing cryptocurrency downturn. The total market sales got to a year’s low in the month of June.
The Promise of Absolute Uniqueness
NFTs deal in the ownership of a unique digital identity to individuals. It is usually in a piece of digital art. NFT ownership is recorded digitally on a decentralized blockchain.
The total NFT sale for the month of June was just above $1 billion. In a report by Chainalysis, it is the worst performance of NFTs since last year. NFT sales reached $12.6 billion in the month of January.
Ethan McMahon said the decline is connected with the general crypto crash. McMahon is an analyst with Chainalysis.
Speaking further, he said that such times lead to consolidation in the affected markets. He said people might see how NFTs pull back with regard to collections. It will also be interesting to see the type of NFTS that make it to prominence in this period.
Note that the cryptocurrency market was worth up to $3 trillion as of last November. It is currently valued at less than $1 trillion.
NFTs depend on the blockchain to transmit information on who owns them. The same mechanism is responsible for their trading. A lot of them are based on Ethereum’s blockchain, which runs on Proof-of-work.
At a time in its peak, the NFT market attracted huge sums. The first tweets of Twitter’s founder, Jack Dorsey, sold for $2.9 million. Beeple sold one of his virtual collages for $69 million.
Axie Infinity’s play-to-earn main token got as high as $9.75 billion. And Coca-Cola raised over $575,000 from the sales of digital customized jackets. The company also sold other items to be used in the metaverse.
According to the report from Chainalysis, NFT reach a height in January. Fast forward to April, the attempt to re-sell Dorsey’s NFT was dropped. The bids for the said NFT simply topped out at $14,000.
Nevertheless, DappRadar said the demand for blue-chip NFTs is still up. DappRadar follows the development of video games based on NFTs and the blockchain.
The price of the cheapest NFT on the BAYC collection only lost 1% to $90,000. DappRadar’s lead researcher said blue-chip NFTs have better performance than most others.
In 2021, the NFT sales got up to $40 billion. But 2022 sales have now surpassed it as it is over $42 billion. The sales made in January and February are worth more than half of this year’s sales.
The cryptocurrency market is under intense pressure with the stock market volatility. Rising inflation and high-interest rates have taken over the market’s appetite. Investors are not motivated to take up risky asset classes such as tech stocks.
The trust in crypto was greatly shaken by Terra’s collapse. Its value was pegged to the US Dollar but it lost it and spiraled down. Problems with other crypto-related firms like Celsius have also taken their toll on NFTs.