The Wall Street Journal report paints a bleak picture of trading in NFTs: NFT sales fell to an average of 19,000 sales per day for the week of May 2, 2022 — down just over 92 percent from the previous peak of 225,000 sales per day in September 2021.
On your way down
The trend has not been broken since then: According to the overview of NFT tracking platform nonfungible.com, the number of NFT sales has continued to decline almost continuously since the second week of May.
Digital certificates are referred to as NFTs, which certify the authenticity of the digital assets associated with them and that prove the purchase of these assets. NFTs can be any form of digital content offered for purchase.
Portfolio as an indicator
NFTs are closely related to cryptocurrencies such as Bitcoin or Eth, since NFT technology is based on the idea of blockchain, which in turn makes cryptocurrencies possible.
In this regard, the Wall Street Journal reported the collapse of another indicator of the popularity of NFTs, the number of active portfolios. Wallets are software tools that users use to manage their cryptocurrency.
Therefore, the low usage of these wallets is an indication of low interest in cryptocurrencies, and therefore also in NFT.
Uncertainty in technology
The Wall Street Journal sees the NFT hype in particular as rising interest rates make particularly speculative investments like cryptocurrency less attractive. The value of Bitcoin has also fallen sharply.
This development can not only be observed in this sector; It affects more and more a large part of the technology sector. The Nasdaq Composite, which is heavily influenced by tech companies, has fallen since April – investors are now investing defensively.
According to investment firm Morgan Stanley, another reason for the decline in interest in NFTs and the associated decline in prices is that actual demand is currently lagging speculative-fueled expectations.
Investments in NFTs were made with the ulterior motive that someone else would buy the acquired assets for a larger amount – a hope that has yet to be realized.
This should be tested in particular by people who have invested in NFTs themselves and are now trying to sell them.
For example, a buyer who bought NFT co-founder Jack Dorsey’s tweet on Twitter for $2.9 million failed to resell it: NFT’s highest bid was just $270.
Is this all just an exaggeration?
While social media is already talking about the “death of the NFT” in relation to these developments, at the same time there are more and more voices that consider such a judgment premature.
For example, CNET sees price declines in the context of the stock market sentiment already described and states that the trend doesn’t just affect NFTs. Moreover, such strong volatility is by no means unusual in a market that is still young, the portal notes.
End or new beginning?
The Wall Street Journal also states that these developments do not necessarily mean the “death” of NFTs in general, but may also be indicative of their further development: it is possible that the current collapse is merely the end of a purely speculative asset (such as the “Bored Ape Yacht Club” cartoon characters “).
On the other hand, value-added NFTs can continue to exist or even regain their popularity. The Wall Street Journal understands that NFTs not only associate digital artwork as a certificate of authenticity, but also promise exclusive access to the film or make it possible to meet a band backstage.