Nfts
NFT Prices Fall as Crypto Investors Place Big Bets on Bitcoin and Ethereum ETFs
In a market dominated by optimism surrounding Bitcoin (BTC) and Ethereum (ETH) price surges, the non-fungible token (NFT) has seen a decline in popularity. NFTs, which include digital artworks and collectibles stored on blockchains, have recently seen a notable loss of appeal.
According to Bloomberg reportGoogle searches for NFTs have reached their lowest levels since 2021, when these tokens first gained mainstream attention.
Popular NFT Collections See Big Price Drops
A significant drop in sales further highlights the difficulties of the NFT market. DappRadar researcher reveals that NFT sales have decreased by more than six percent to $8.5 billion in the first five months of this year compared to the same period of the previous year.
This decline stands in stark contrast to the industry’s peak in January 2022, when it recorded an impressive $17.2 billion in NFT sales in a single month.
The report further notes that sentiment surrounding NFTs spiked last month when the United States Securities and Exchange Commission (SEC) took steps to approve exchange traded funds (ETF) investing directly in Ethereum.
In anticipation of this approval, some investors have reportedly started reallocating their investments into ETH while divesting from NFTs.
Nicolas Lallement, co-founder of NFT data tracker NFT Price Floor, explains that capital turnover is common in crypto markets, with Ethereum likely to continue to attract and absorb. market capitalleading to price drops for other assets like NFTs.
This year, many popular NFT collections have seen significant price drops. NFT Price Floor reports that prices for these collections have fallen 40-50% since the start of the year. CryptoPunks, a collection created on the Ethereum network, is trading around 2021 levels and is down 29% from its lowest point the previous year.
Likewise, collections such as Bored Ape Yacht Club (BAYC) and Chromie Squiggle have seen their Ethereum-based price floors decline to about half of what they were at last year’s lowest point.
Market correction looms
NFT collector Daniel Maegaard confirms that most NFT collections continue to decline or remain stagnant after the maximum euphoria observed in 2021. Maegaard has recently sold several high-profile NFTs, including works by digital artists XCOPY, Hackatao, and Coldie.
While some NFT art collections, like that of XCOPY, have seen positive returns over the past 90 days, Lallement says the overall trend points to a market correction.
Amidst the challenges facing the NFT market, one platform that has shown resilience is the NFT marketplace, Magic Eden. The platform has gained market share as trading activity on its platform has increased, according to Sara Gherghelas, an analyst at DappRadar. Although Magic Eden recorded recording volume in April, business activity has since declined.
In summary, the current state of the non-fungible token market reflects a decline in popularity and price. Although some individual collections have posted positive returns, overall market sentiment suggests a continued correction in the NFT market.
At the time of writing, ETH was trading at $3,480, following Bitcoin’s lead, with a steep decline of 5% in the last 24 hours and over 8% in the last seven last days.
Featured image of DALL-E, chart by TradingView.com