Nfts
Why NFTs are seeing a 66% drop in trading even as Ethereum recovers – DL News
- NFTs based on the Ethereum blockchain have recorded double-digit losses.
- Changing investor appetite, lack of utilities and high gas costs are key factors.
- Prices could start to rally once money leaves major cryptocurrencies.
Ethereum, the world’s second largest cryptocurrency, is on tears. The same cannot be said for non-fungible tokens, or NFTs, on the network.
Popular NFT collections including DeGods, Azuki, Pudgy Penguins, and Bored Ape Yacht Club have seen double-digit losses over the past seven days.
Ethereum, meanwhile, is up 11% over the same period.
So what happens ?
“We are seeing the first real bear market for NFTs, revealing a decoupling from their underlying asset, Ethereum,” said Alex Casassovici, founder of web3 streaming project Azarus. DL News.
NFT trading volumes are down about 66% from last year as investors turn to Bitcoin and Ethereum, both of which are in the throes of a dizzying new rally, Transak’s Gandon said.
This is also likely due to rising fees on Ethereum, said John Stefanidis, CEO and co-founder of crypto gaming startup Balthazar DAO. DL News.
“When the price of Ethereum increases, it can lead to increased gas fees, discouraging NFT trading,” he said. Data from Etherscan shows that transaction fees on the network have increased by more than 350% since the start of the year.
Join the community to receive our latest stories and updates
Malaise NFT
NFTs have struggled to regain momentum after being dragged into a broader crypto market sell-off in 2022, further exacerbated by waning interest in the sector.
Arguably the most popular NFT collection comes from the Bored Ape Yacht Club, whose floor price has gradually declined since its May 1, 2022 peak of $600,000.
A floor price refers to the lowest price at which an NFT within a specific collection is currently listed on marketplaces like OpenSea and Blur.
Since March 6 of this year, the value of Bored Ape NFTs has decreased by 13%, while DeGods, another popular project, has fallen by 34% over the same period.
“The current NFT narrative is more about utility NFTs that you could use in blockchain games,” said Etienne Gandon, business development analyst at crypto-ramp company Transak. DL News.
Indeed, the market is less focused on speculation on large NFT collections, which are more about showcasing one’s social status, he said.
“It takes a lot of new entrants to drive prices up,” Gandon said. “Right now, we’re not at that stage.”
The outlook for NFTs could improve once the current surge in the broader cryptocurrency market subsides, Casassovici asserts.
“Investors, always looking for new avenues for growth, may find the depressed floor prices of NFTs an attractive proposition. This potential pivot could reignite interest in NFTs, presenting an opportunity for recovery and growth,” he said.
Crypto market players
- Bitcoin is up 1.2% in the last 24 hours, trading at $72,443
- Ethereum followed suit, up 1% over the same period, priced at $4,044.
What we read
Sebastian Sinclair is markets correspondent for DL News. Do you have any advice? Contact Seb at sebastian@dlnews.com.