2021 saw a surge in popularity for nonfungible tokens. Various musicians, athletes, celebrities, and retailers took advantage of innovative technology to promote digital copies of their products. While NFTs were once all the rage, current statistics show their interest is waning. The average weekly volume of NFT trades has been $35 million since the beginning of September. Despite the poor stock market and soaring inflation, no indications of a market recovery have emerged. While some individuals purchase NFTs, expecting their value to increase over time, others do so just for social status or to participate in a rapidly developing industry.
As reported by NonFungible, NFT sales declined by 47% during the first three months of this year. After reaching an all-time high of $8.4 billion in Q2 2022, NFT sales fell to $3.4 billion in Q3 2022. According to blockchain specialist Merav Ozair, the current cryptocurrency meltdown is a big reason why interest in NFTs is decreasing. As the price of cryptocurrencies like bitcoin, Ethereum, and others drops, the buying power of customers dwindles, making it harder for them to afford NFTs.
Is Fraud A Major Reason Behind NFTs Losing Luster?
Over the last year, a billion-dollar balloon has developed around digital tokens, primarily due to the support of many well-known personalities. However, cryptocurrency prices are plummeting, and some investors worry that NFTs may fall into line. The reputation of the sector has been severely damaged during the year. More than 80% of NFTs made using the exchange’s free tool were fake, OpenSea revealed in January. Many of these NFTs were duplicates of existing NFTs or illegal reproductions of well-known art pieces. Losses from fraud have been called “eye-watering,” and this has been identified as one of the main reasons for the NFT industry crisis.
The Uncertainty Of The Investing Climate And The Fear Of Missing Out
FOMO fueled the NFT market’s immediate boost, but since prices have fallen dramatically, investors are hesitant to invest their money in the risky asset class. Investors have lost interest in the NFT industry since most companies only peddle the primary forms of digital currency. Uncertainty among investors is exacerbated by the fact that many of these low-value products are clustered in highly centralized marketplaces.
An Imminent NFT Bubble Explosion Might Bring The Whole System Crashing Down
NFTs have generally decreased, including online games like Axie Infinity and Gods Unchained, which have seen a 93% drop in revenue in the last year. Over 80% less volume is being traded in the art and collectibles sector compared to the previous year’s time. This includes popular NFT collections like CryptoPunks and the Bored Ape Yacht Club. OpenSea trading activity had dropped 88% from September 2021, when it was about $3 billion, to September 2022, when it was roughly $350 million.
