But does this mean that the non-fungible token market is dead and it’s time to forget about it? A recent study by dappGambl paints a rather bleak picture.
The Depreciation of NFTs
Among the 73,257 NFT collections traded on the market and scrutinized by researchers a staggering 69,795 (95%) have a market capitalization of 0 ETH. In essence, these are “digital waste” devoid of any value.
More than 23 million individuals are owners of such tokens, highlighting the extreme risk associated with the NFT market. It’s difficult to find another industry where so many have invested without receiving anything of value in return.
The era of sky-high prices for individual tokens has also become a relic of the past. In 41% of collections, the price ranges from $5 to $100 with less than 1% having prices exceeding $6,000.
Declining NFTs Demand and Market Behavior
Data concerning the demand for NFT collections is not promicing for the market’s future. Only 20% of collections have been entirely sold out, leaving the majority struggling to find buyers for their tokens. Supply greatly outpaces demand, and prospects for a turnaround appear vague.
What is also interesting is the behavior of NFT holders. Those who own tokens that have at least some value often disregard market conditions, choosing to set unreasonably high prices. It seems that non-fungible token owners are still holding out hope for a new round of explosive market growth and are hesitant to realize their losses.
Are NFTs Gone?
On the one hand, the speculative NFT market with its sky-high profits and explosive growth is most likely actually dead. At least, there are no indicators pointing to its resurgence in the familiar form we once knew. Perhaps it’s time to say farewell to NFT stars, multimillion-dollar deals and the wild hype.
On the other hand, the utilitarian functionality of NFTs remains alive and in demand. Projects incorporating NFTs in one capacity or another continue to be developed and enter the market, often with success. However, in these projects (the successful ones), NFTs are merely one component of the ecosystem, not the central product.
In other words, the NFT market has taken the beaten path of the blockchain industry as a whole. In 2017–2018, “blockchain” was a “magical” word, drawing investments effortlessly. Yet, the ICO market eventually collapsed. Likewise, “NFT” in 2020–2021 was a “magic word”, but we can now assert with confidence that the magic has run out.