NFTs
NFT Prices Fall as Crypto Investors Make Big Bets on Bitcoin and Ethereum ETFs
In a market dominated by optimism surrounding Bitcoin (BTC) and Ethereum (ETH) price spikes, the non-fungible token The (NFT) market has seen a decline in popularity. NFTs, which include digital artworks and collectibles registered on blockchains, have recently suffered a notable loss of appeal.
According to a Bloomberg reportGoogle searches for NFTs have reached their lowest levels since 2021, when these tokens first gained public attention.
Popular NFT Collections Experience Sharp Price Drops
A significant drop in sales further highlights the struggles of the NFT market. Researcher DappRadar reveals that NFT sales decreased by more than six percent to $8.5 billion in the first five months of this year compared to the same period last year.
This decline is in stark contrast to the industry’s peak in January 2022, when it recorded a staggering $17.2 billion in NFT sales in a single month.
The report further notes that sentiment around NFTs spiked last month when the U.S. Securities and Exchange Commission (SEC) initiated steps to approve exchange traded funds (ETFs) investing directly in Ethereum.
In anticipation of this approval, some investors reportedly began reallocating their investments into ETH while divesting from NFTs.
Nicolas Lallement, co-founder of NFT data tracker NFT Price Floor, explains that capital rotation is common in crypto markets, with Ethereum likely to continue to attract and absorb market capitalresulting in price drops for other assets like NFTs.
This year, many popular NFT collections have seen significant price drops. NFT Price Floor reports that prices for these collections are down 40% to 50% year-to-date. CryptoPunks, a collection minted on the Ethereum network, is trading around 2021 levels and is down 29% from its low a year ago.
Likewise, collections like Bored Ape Yacht Club (BAYC) and Chromie Squiggle have seen their minimum prices, based on Ethereum, fall to approximately half of what they were at last year’s low.
Market Correction Approaches
Daniel Maegaard, an NFT collector, confirms that most NFT collections continue to decline or remain stagnant after the peak of euphoria observed in 2021. Maegaard recently sold several top-tier NFTs, including works by digital artists XCOPY, Hackatao, and Coldie.
While some NFT art collections like XCOPY have seen positive returns over the past 90 days, Lallement says the overall trend points to a market correction.
Amid the challenges facing the NFT market, one platform that has demonstrated resilience is the NFT marketplace, Magic Eden. The platform has been gaining market share as trading activity on its platform increases, according to Sara Gherghelas, an analyst at DappRadar. Although Magic Eden recorded record volume in April, commercial activity has since declined.
In short, the current state of the non-fungible token market reflects a decline in popularity and prices. While some individual collections have shown positive returns, overall market sentiment suggests a continuation of the NFT market correction.
At the time of writing, ETH is trading at $3,480, following Bitcoin’s example with a sharp drop of 5% in the last 24 hours and more than 8% in the last seven days.
Featured image of DALL-E, chart from TradingView.com