NFTs Market Value Reduces By Over 90% After Crypto Crash
[TL; DR]
Recently, the value of NFTs dropped by about 90% while the crypto market crashed.
According to Protos, the total NFT sales dropped to 19.4 million dollars in June from about 102 million dollars in May.
Data released by Nonfungible showed that the NFT market at its peak had an average daily sales of 225,000 dollars, and the sales fell to 14,000 dollars in June.
In November 2021, there was 119,000 dollars worth of active wallets in the NFT market, and in June 2022, the number fell to 14,000 dollars.
The cumulative statistics show that the price value of NFTs declined by 92%.
The main reason for the decline in NFTs market value is the crypto crash.
The crypto crash saw the crypto market falling from an all-time high estimation of 3 trillion in November 2021 to 977 billion in June 2022.
The crypto crash is caused by a massive sell-off of digital assets by investors, high-interest rates, and the fear of inflation.
Some NFT collectibles not affected by the crypto crash include Moonbirds NFT, Yuga Lab, etc.
The market crash is expected to be a phase that won't last long and is necessary to signal another era.
It is no longer news that the crypto market is currently in its declining, bullish phase. The price value of crypto tokens to an all-time low affects all other protocols in the blockchain ecosystem.
Just as the buzz and price soar affected these blockchain protocols, the fall in price is also directly causing a sharp decline among them. Some of the protocols affected within the ecosystem include the Non-fungible token (NFTs).
This article will identify how the crypto crash reduced over 90% of the NFT market value in this article.
Let's begin!
Did The NFT Market Value Drop?
Image: Marifilmines
According to Protos, the total NFT sales rose to about 102 million dollars on May 3rd, breaking a single-day record and 170 million dollars in a 7days period. By June, the NFT processed sales fell to 19.4 million dollars.
In another data released by Nonfungible, the NFT market was at its peak in September 2021 when daily average sales rose to about 225,000 dollars. In June 2022, the daily average sales fell to about 14,000 dollars.
Similarly, the number of active wallets in the Non-fungible token (NFT) market rose to about 119,000 dollars in November 2021. By June 2022, the number of active wallets has fallen to about 14,000 dollars.
The data above showed that both the NFT market daily average sales and the number of active wallets were at their all-time high rate in November 2021, thus signifying a booming market.
However, in June 2022, the price values dropped to an all-time low with a 92% decline in daily average sales and an 88% decline in the number of active wallets, respectively.
This data shows that the general price and market value of the NFT are declining drastically. Can you now imagine the cause of this sharp decline?
Experts opine that the direct cause of the 90% decline is the incessant crypto crash.
At this juncture, it is pertinent to examine the crypto crash and other major happenings leading to the decline in the market value of the Non-fungible Tokens.
The Crypto crash
Image: Nairametrics
The crypto market rose to about 3 trillion dollars in November 2021, and by Mid June, the global market cap had fallen to about 977 billion dollars. Research shows that the immediate trigger for the drastic decline in the market value of the cryptocurrency or the primary cause of the crypto crash is the massive sell-off by investors amid the continuous hike of the interest rate and heightened inflation fears.
Prominent investors are pulling out their funds and are losing interest in riskier assets. The fact that the assets are proving to be more volatile and riskier than envisaged makes these investors sell off their investments.
Another cause of the crash is the pressure from the Federal Reserve. The Feds keep hiking the interest rates to combat the rising inflation. The major crypto tokens such as Bitcoin and Ethereum suffered a drastic loss due to the data that shows the United States inflation figure hitting a 40-year high rate.
Furthermore, the crash has been envisaged, and it is no surprise to those industry players and experts who have been expecting it. However, no one envisaged that the crash would be as enormous as it is today.
Amidst these supposed crashes in the market value of NFTs, some of the NFT collectibles are still standing strong and continue to fare well in the NFT market. They include;
The Moonbirds NFT
The Moonbirds NFT project recently added 500million dollars worth of trading volume to its collectibles. The Moonbirds collection consists of 10,000 utility-enabled Profile picture NFTs, and these PFPs feature a richly diverse and unique pool of rarity-powered traits. The Moonbirds collection was launched in April 2022 under the ERC-721 standard on Ethereum's network.
The Yuga Lab
The Yuga Lab recently launched its new Otherdeeds NFT. The newly launched NFT collection is a virtual land sale for a forthcoming video game.
Even though the floor price of the newly released collection was pegged at 5,500/ 5000 dollars, it was still in high demand. The increased demand led to the crash of the Ethereum blockchain.
Conclusion
The NFT market witnessed the buzz and attention for four months before the crash began. The crypto crash does not signify the end of the Non-fungible tokens.
“NFTs are at the end of one curve and the start of another.”
What many characterize as the decline in the market value of the NFT is signifying a new era in the ecosystem. Holders, creators, and investors in the Non-fungible tokens are moving from the profile picture (PFP) NFTs to utility NFTs.
The NFTs with use is expected to witness a booming era and be the future of NFTs.
Author: Valentine. A, Gate.io Researcher
This article represents only the researcher's views and does not constitute investment suggestions.
Gate.io reserves all rights to this article. Reposting of the article will be permitted, provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
