The rise of cryptoart was a huge talking point last year. As NFT lines like Bored Apes and Cryptopunks made millions, some were under the assumption that the NFT industry was too big to fail. While the cryptoart line is still far from dead, it’s already seeing a substantial decline. But does this mark the end of NFTs?
The NFT decline
Reported by OneZero, the NFT industry has lost more than half its value since its impressive peak in January 2021. While cryptoart is still an industry with substantial financial backing, it’s already underperforming when compared to last year.
Data taken from crypto tracking website Coin Market Cap shows a market falling to keep its growth. In one report, the market cap for the entire NFT industry was outed as being on a massive downwards trend. Last year, the market cap reached a peak of $23 billion. Nowadays, that number is just over $10 billion.
The drop in market cap comes amid a massive slow down of what was 2021’s fastest growing market. For the first time since the sale of Beeple’s ‘Everydays: the first 5,000 days’ NFT, sales of cryptoart have fallen below 800,000 monthly sales. Additionally, resales — a key part of the trend — have plummeted from an all-time high of 103,765 to just 7,900 a day.
This is all diluted down to the price of NFTs as a whole. While the industry is known for massive sales in the form of Beeple assets or Metaverse yachts, smaller projects are also purchased. Back in January 2021, the average price of an NFT sale was $6,800. Now, that's dropped to just $2000.
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Why is it declining?
The NFT industry has dropped by over 50%, but it’s still a decently profitable space for those who can make a name for themselves. However, the interest in cryptoart has dramatically fallen with the space currently being held up by a niche group of whales.
Perhaps this is due to the overwhelming controversy surrounding NFTs. With NFT platforms like Opensea confirming that 80% of NFTs are scams or plagiarism — or even fraudulent — many are unwilling to jump in.
Additionally, many people just don't understand NFTs, and the definitely can't explain NFTs. For the majority of people, digital only assets are just not as enticing as they are to other people. And, to be honest, there isn't much of an incentive.
Just like cryptocurrency, NFTs are likely to have drops and rises. Currently, the industry could just be in a drop, it could not. Only time can tell.