- According to DappRadar, NFT sales plunged 67% in the third quarter and the average selling prices for NFTs have tumbled in recent months.
- While average NFT transactions might be lower in dollar value, a large bulk of attention and value accrual still resides within the more expensive, well-known collections.
NFTs or non-fungible tokens were all the rage until they weren’t.
According to DappRadar, a website that tracks decentralized application usage, NFT sales plunged 67% in the third quarter and the average selling prices for NFTs have tumbled in recent months.
OpenSea, the world’s biggest NFT marketplace, had a 38% market share in September, down from nearly 85% in March as other forums rise up to compete in what was once seen as a lucrative new market and asset class.
While speculators and celebrities made an exodus, dedicated long-term believers in the various potential use cases for NFTs, and collectors, are betting that the plunge in prices will rekindle speculative demand.
On average, an Ethereum blockchain-based NFT fetched US$120 in October, compared with US$1,631 in early February, according to market data researcher NonFungible.
On the Ronin blockchain used by Axie Infinity, average prices were down to US$16 in October as well, from US$69 in February.
Making matters worse, there is mounting concern over whether NFTs are likely to be viewed as securities, in light of the U.S. Securities and Exchange Commission’s investigation of Yuga Labs, creators of the popular Bored Ape Yacht Club NFTs.
According to blockchain analytics firm Nansen, mints of new NFTs reached all-time highs in the week of September 19, largely due to the debut of small NFT collections at low prices.
However, Nansen suggests that the popularity of more affordable NFTs doesn’t automatically spell the demise of large, expensive collections.
An index of blue-chip NFTs like Bored Ape Yacht Club, Azuki, CryptoPunks and Doodles still often outperforms others.
While average NFT transactions might be lower in dollar value, a large bulk of attention and value accrual still resides within the more expensive, well-known collections.
Luxury brands have also been quick to embrace NFTs and a recent study by blockchain data service provider Coingecko has found that the apparel and luxury goods industry has the most brands launching NFTs since 2020.
The value proposition of NFTs for luxury labels is perhaps more obvious than for other applications, given how NFTs with QR codes can be used to prove authenticity and NFTs can be blended with physical goods to create a physical-digital collectible blend.
NFTs which are purely digital assets such as images however will remain somewhat speculative for now and the low prices may lure some punters but their long term value will be indeterminate especially against a backdrop of a rising dollar and central bank policy tightening.
