NFT Market Is Going Down According To All Observations

The once-booming non-fungible token (NFT) market is down by nearly every trackable metric. In sectors from art to gaming, trading volume for NFTs across all sectors has sunk about 90% since this time last year, according to data from the crypto websites The Block and CryptoSlam.

That’s a vast drop for an NFT industry that recorded several $1 billion trading weeks in the last few years as traders, speculators, and collectors vied to obtain coveted digital collectibles to turn a profit, gain status, and show off. Since the start of September, NFT trading volumes have averaged $35 million per week. In middle of  a week stock market and high inflation, the market has shown no signs of rebounding.

Many of those art NFTs are being bought and sold on OpenSea, the most prominent peer-to-peer marketplace. Trading volume on the platform has plunged from around $3 billion in September 2021 to $350 million in September 2022, an 88% drop, according to third-party data from The Block.

Venture capitalist Li Jin also argues today’s NFT crash, while driven by macroeconomic headwinds, will lead to a better and more utilitarian NFT market in the future. “To me, the downturn also highlights the major opportunity that I see around NFTs, which is to take them from assets that people collect and speculate on, to assets that people actually use,”

Jin, a general partner with the investment firms Atelier Ventures and Variant, predicted NFTs will have more popular use cases in the future such as representing one’s digital identity (so-called “soulbound” NFTs), ensuring voting rights or membership in decentralized communities, and tracking in-game assets.

In the meantime, says Mahesh Vellanki, managing partner at the crypto venture firm SuperLayer, this “major correction” will wipe out many NFT projects before setting the stage for an industry recovery, especially on newer blockchains such as Solana. “The bigger story here is not so much that NFTs are down but that the market for them is changing,”

Vellanki wrote in an email. “We’re seeing more competition and in turn more creative projects getting built on a wider variety of chains.”