Are NFTs dead? Not yet, but the trend is worrying
Non-fungible tokens (NFTs) shook the world a few years ago as they gained in popularity. Stories are told of people who spent millions buying NFTs and metaverse land in 2021. One of the most popular ones is when the CEO of Tokens.com spent $2.4 million in a virtual land or when Republuc Realm bought a virtual Sandbox plot for $4.3 million.
Stories have also been told of many people who bought NFTs and lost almost all their money. Now, the question is whether NFTs are dead and what their future holds. Besides, NFTs are some of the most important parts of the blockchain industry.
Are NFTs dead?
Most analysts believe that NFTs are now officially dead as the floor prices of popular products like the Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) have plunged to a record low. Other NFTs that used to do modestly well like Othedeed and Sorare have come under a lot of pressure recently.
And they are not alone. OpenSea, the company that dominated the industry is in trouble as demand for these tokens has waned. In November last year, the company laid off over 50% of its staff a few months after it shed 20%. There are worries about whether the company will survive.
It is not alone. SuperRare, another NFT marketplace shed over 30% of its workers a few months ago as demand for these assets dwindled. GameStop, the giant American retailer, also closed its collectible marketplace citing weak sales.
Other NFT metrics are not encouraging at all. For example, data by Cryptoslam shows that the total sales volume for NFTs in the past 24 hours stood at just $38 million, a 19% decline from the previous session. The volume dropped by 38% in the past 30 days to $1.12 billion, signaling that the trend is not going on well.
In all, total NFT sales have totaled over $60 billion in the past few years. As shown below, the trend has not been encouraging with the volume, number of sellers, and buyers being in a downward trend.
NFT sales volumes
Wash trading is one of the biggest challenges that the NFT industry has gone through in the past few years. For example, while the total volume of NFTs stands at over $60 billion, wash trades accounted for $33.5 billion. In the past 30 days, the volume of NFT sales was $1.1 billion of which $348 million was wash sales.
For starters, these wash sales are situations where people trade among themselves with the goal of pumping the prices.
NFTs are still alive but the future looks grim
A look at the ongoing NFT flows shows that the trend is worrying. It is a sign that the sector is having a slow death as NFT values fall. If this trend continues, I believe that the industry will not exist in the next few years.
It is alive as we can see with the daily volume of NFT sales. Data shows that Ethereum NFTs sold over $26 million in the past 24 hours. They were followed by Bitcoin Ordinals, which stood at more than $7.52 million, and Polygon, which did over $1.1 million.
Most of the other blockchains like Arbitrum, Solana, Avalanche, and Ronin did less than $300k in total sales. At their peak, these blockchains were handling NFTs worth millions of dollars per day.
Some analysts believe that the NFT industry was doomed to fail from the beginning since most collections did not have any value at all. Unlike cryptocurrencies, these NFTs did not pay staking rewards and were just for speculation purposes.
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