2024-02-09 11:01:06 ET
Non-Fungible Tokens (NFTs) took the world by storm by gaining popularity a few years ago. Stories are told about people who spent millions buying NFTs and the metaverse land in 2021. One of the most popular stories is when the CEO of Token.com spent $2.4 million on a virtual land or when Republic Real bought a virtual sandbox plot for $4.3 million.
Many stories have also been reported of people who bought NFTs and lost almost all their money. Now, the question is whether NFTs are finished and what is their future. Furthermore, 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 minimum prices for popular products like Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MYC) have fallen to record lows. Other NFTs that performed moderately well, like Othedeed and Sorare, have come under considerable pressure recently.
And they are not alone. OpenSea, the company that dominates the industry, is in trouble as demand for these tokens has decreased. In November last year, the company laid off more than 50% of its employees, just months after cutting 20%. There is concern about whether the company will survive or not.
It is not alone. SuperRare, another NFT marketplace, laid off more than 30% of its staff a few months ago as demand for these assets decreased. Gamestop
The veteran US retailer also closed its collectibles market, citing weak sales.
Other NFT metrics are not at all encouraging. For example, data by CryptoSlam
It turns out that NFT sales volume totaled only $38 million in the last 24 hours, down 19% from the previous session. Volume dropped by 38% over the past 30 days to $1.12 billion, which shows that the trend is not going well.
Overall, total NFT sales have exceeded $60 billion over the past few years. As shown below, the trend has not been encouraging, with volume, number of sellers and buyers declining.
NFT sales volume
Wash trading is one of the biggest challenges that the NFT industry has gone through in the last few years. For example, while the total volume of NFTs is over $60 billion, wash trades account for $33.5 billion. Over the past 30 days, NFT sales volume was $1.1 billion, of which $348 million were wash sales.
For starters, these wash sales are situations where people trade among themselves with the goal of driving up prices.
NFTs are still alive but the future looks bleak
A look at the ongoing NFT influx shows that the trend is worrying. This is a sign that the sector is suffering a slow death due to the decline in NFT values. If this trend continues, I believe the industry will cease to exist in the next few years.
It is vibrant as we can see with the daily volume of NFT sales. Data shows that Ethereum NFTs were sold for more than $26 million in the last 24 hours. They were followed by Bitcoin Ordinals, worth more than $7.52 million, and Polygon, worth more than $1.1 million.
Most other blockchains like Arbitrum, Solana, Avalanche and Ronin had total sales of less than $300k. At their peak, these blockchains were handling millions of dollars worth of NFTs per day.
Some analysts believe that the NFT industry was doomed to fail from the beginning as most of the collectibles had no value. Unlike cryptocurrencies, these NFTs did not pay staking rewards and were only for speculation purposes.
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