The cryptocurrency market took a massive hit recently, losing about $500 billion of value. Non-fungible tokens (NFTs) were the first assets to experience the effect. The NFT euphoria has cooled recently, opening the floodgates to colossal losses in space. May’s NFTs sales volume nearly equaled last year’s total of $40bn, but there is more.
NFTs On Bloodbath
The weekly update by Lucas Outumuro from IntoTheBlock highlighted the latest decline in the NFT market. He stated that the furthest assets within the risk sector are crashing. The non-fungible tokens transaction volume saw spectacular plunges regardless of starting 2022 with highs. For instance, Bored Ape Yacht Club explored a colossal 60% loss.
The report suggests that purchasing BAYC NFTs at floor prices a month ago would have led to losses of about $250K. That matches the slide in ETH prices, the primary currency for trading NFTs. Nevertheless, Ethereum lost 30% ‘only’ in May, whereas most non-fungible token collections lost more than 50% of their value.
The NFTs price crash translated to theatrical slumps in trading volumes. The market could not maintain the momentum seen early in the year, welcoming crashes since April. The transaction volume stood beyond $16 billion in January before crashing to explore $4 billion in May. TechCrunch pointed out disappointment by the Coinbase NFT marketplace, boasting around 2,000 users, with NFTs worth below $1 million.
The declines in trading volumes and prices translated to a drop in NFTs’ social sentiment. For instance, NFT Google search lost 75% since January’s high.
Chainalysis report shows transactions since the previous summer came in fits & starts. Only two spikes contributed to NFT activity: Mutant Ape Yacht Club launch late in August and the introduction of the new LooksRare NFT marketplace that propelled actions between January and February.
Chainalysis’ economist Ethan McMahon stated that shows NFT market consolidation, with few firms boasting an increasing market share. Block Journal CEO David Hsiao said that the digital asset market appears bleak in the coming days, planning to limit the damage by selling. He added that the NFT marketplace could suffer due to plummeting crypto prices and other conditions such as inflation, the Russia-Ukraine conflict, and surging interest rates.
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