The Non-Fungible Tokens (NFT) market has experienced a steady decline, in line with the general crypto market. According to data from CryptoSlam, the total volume of NFT sales across the Globe in July was $647.23 million. That is a 26% decline from the $879 million sold in June.
The decline is even far reaching when compared to the beginning of the year. In January 2022, global NFT sales volume was around $4.6 billion. The downturn has been attributed to decreased investor interest in digital collectables.
With a sales volume of less than $700 million in July, NFTs sales have hit a new low. The least number was sales was far back in June 2021 when NFTs were generating interest across the globe. The total sales volume was $327 million.
The report also indicates that the market has seen a decline of up to $4 billion since January 2022.
The cause of this decline?
NFTs are digital assets that serve as a representation of a range of unique tangible and intangible items such as virtual real estate, collectible sports cards, digital art, and digital sneakers among others. They are said to be indestructible, non-interoperable, indivisible, and verifiable.
The market sales went through the ceiling at the start of the year but the bearish trends of the market which deepened in the second week of May have not helped the sales volume of NFT projects in subsequent months.
Also, there are talks that the NFT market is gradually losing its initial hype because its foundation was built on ‘nothingness’. The critics say NFT investors are no longer willing to splurge millions of dollars on ‘worthless Jpegs’.
There are indications that the NFT concept is a ‘greater fool theory’. An example is Sina Estavi who bought Jack Dorsey’s first tweet NFT for 2.9 million in March 2021. Shockingly, he wanted to sell the NFT for $48 million in April 2022 but the bid he got was barely $300.
He says since most NFTs are built on the Ethereum network, the plunge in the market price of the token means a decrease in the market value of NFTs. He also says occurrences in the space like theft and insider trading have had a negative effect on the NFT market.
“As most NFTs were denominated in Ether, only NFTs that were regarded as blue-chips could still command investor interest and patience. Also, there have been reports of NFT theft, insider trading and such committed on the major Art-focused NFT marketplaces. I think NFT applications are expanding to real estate, entertainment, fashion and other industries as they should be and so as the options will increase, Ape themed NFTs will feel the pressure.”
What to expect?
Digital art is actually the most common use case for NFTs and in Africa, we have no shortage of talent for this. It is only proper to declare Africa as a region where top-notch creativity is coming in contact with technology and both are having a life-changing conversation.
One of the reasons why Africans are now dancing more than ever in the NFT party is that creators, consumers and investors can claim ownership, access new markets, put out content, and purchase and own assets from all over the world without having to follow conventional routes which are riddled with all sorts of obstacles.
Efosa Ighodaro says application-based NFTs will stay strong and only a few hype-based NFTs will remain but asset-based NFTs are here forever.
“…the hype-based NFTs are heading to zero. For as long as the crypto winter continues, we’ll see hype NFTs consolidating(stagnant) and asset/inclusion based tokenization NFTs gaining fast adoption especially in countries with high inflation and currency devaluation issues. Actually, it should gain adoption everywhere, the savings account is dead. Asset-based NFTs backed with adequate liquidity is the new banking”
All indications now say only blue chip NFTs (those with use cases) will pass these stormy waters. Just like the case in the crypto market where shitcoins and memecoins always sink during bear markets.
The big question is, are you creating blue chips?