NFTs
Bitcoin crash hits NFT market: sales volume drops sharply in Q2
The Digital Collectibles Market suffered A major decline in Q2 2024, with sales hitting their lowest point since late last year. Data from CryptoSlam shows that non-fungible token (NFT) trading volume fell 45% in Q2, falling to $2.24 billion. The drop followed an initial surge from $2.9 billion in Q4 2023 to $4.1 billion in Q1 2024.
As Bitcoin falters at a high level, the NFT market is under severe pressure. NFTs are a risky asset, and when liquidity dries up, prices seem to fall off a cliff.
Several factors could contribute to the downturn. These include consumers buying NFTs at discounted rates, a growing shift of interest towards Bitcoin and Ethereum ETFs, the prevalence of wash trading practices, and the saturation of the NFT market.
Despite the ongoing downward trend, some NFT collections have managed to turn huge profits. With so many NFTs out there, there’s bound to be some business to be had.
High flyers shot down
CryptoPunks, one of the earliest and most influential NFT projects, has made a remarkable comeback. It became the best-selling NFT collection of the week ending June 22, with a 155% increase in sales volume to reach $5.26 million.
Mythos’ DMarket saw a slight decline of 9.21% in sales but still managed to reach over $4 million. Bored Ape Yacht Club (BAYC), an Ethereum-based project, secured the third spot with nearly $3.5 million in sales, marking a 73.66% increase from the previous week.
Solana-based NFTs set a new record with $5 billion in historical sales volume in February, while Bitcoin-based NFTs rose in the rankings, recording $4.27 billion in sales through June.
Additionally, one of the notable events of the quarter involved billionaire Mark Cuban, whose cryptocurrency wallet, linked to the Ethereum Name Service (ENS) domain “markcuban.eth,” became active after nearly two years of inactivity.
Cuban has reportedly sold several high-profile NFTs, including EulerBeats Genesis and Pudgy Penguins. In just two days, Cuban’s wallet sold 14 NFTs worth approximately $38,533, with the highest priced item being Pudgy Penguin #6239, which sold for $30,578.
Bitcoin may extend the correction
The decline in NFT trading volume reflects the broader negative outlook for the cryptocurrency market. Analysts predict that Bitcoin could fall to $50,000, partially influenced by macroeconomic factors such as the upcoming US elections and changes in the Consumer Price Index (CPI).
Beyond the macro, recent transfers from large Bitcoin holders, including Mt. Gox and US governments, could exacerbate the bearish momentum.
According to an announcement on Monday, Mt. Gox will begin paying its customers in July. Refunds are estimated at over $9 billion in cash, Bitcoin and Bitcoin cash. This could increase selling pressure in the markets.
The recent transfer of 900 BTC by the German government, with 400 BTC transferred to Coinbase and Kraken, and the alleged transfer of nearly 4,000 BTC by the US government to Coinbase, also add further fears to the overall market sentiment.
According to CoinGecko, Bitcoin is trading around $61,000, down 1.3% over the past 24 hours. Bitcoin’s fear-greed index is currently at “fear.”
Bitcoin’s struggle to reclaim its key resistance level has sparked concerns among investors and market analysts about the long-term viability of the NFT market.
However, the drop in sales does not indicate that NFTs are disappearing. Instead, it highlights the growing popularity of affordable NFT sales, making the space more accessible to a wider audience who may prefer to start with lower-cost options.
The NFT market has seen a significant dip in the past month, with sales volumes falling across major blockchains like Bitcoin, Ethereum, and Solana. July could be better, but it would be wise to exercise caution across all digital assets.
In May, the NFT market recorded a total sales volume of $0.63 billion, marking a 41% drop from April. Sales volumes across major blockchains also dropped notably, with Bitcoin experiencing a sharp decline from $602 million to $194 million in May, a 68% drop.