We’re taking a look at whether or not NFTs are really in decline.
NFTs are feeling the full force of the difficulties currently facing the cryptocurrency market. Investors are increasingly cautious about buying these non-fungible tokens, especially since many have lost money in the field in recent months. As a result of these challenging times, NFT resale profits have dropped by around 46 percent.
The NFT industry continues to be impacted by the downturn in the cryptocurrency market. In its latest report regarding the second quarter of 2022, Nonfungible.com — a site that specialises in analysing the NFT market — reveals a significant decline in resale profits.
In the first quarter, asset resales generated $3.5 billion in profits for investors. Unfortunately for them, the second quarter saw a steep decline, with only US$1.8 billion in capital gains — a drop of about 46 percent.
NFTs are essentially unique digital files that can take the form of a piece of art, a virtual plot of land, a photo, a video or even weapons in a video game. Each token is registered on the blockchain, guaranteeing its authenticity and storing all relevant information available since its creation. In fact, each token has unique characteristics preventing it from being interchangeable.
Are NFTs on the decline?
“The market is experiencing a historical bearish period,” said Nonfungible.com in a statement. “Liquidity is down and prices are very largely affected by the fall in the value of cryptocurrencies. For the first time in the history of NFTs, trading-related activities are no longer profitable.”
Other data available in the report shows a rise in loss-making sales of nearly 23 percent. As such, investors seem less confident in the ability of some NFTs to rebound. Moreover, the average holding period for these digital assets increased from 30.9 days to 47.9 days between Q1 and Q2 2022. This is likely a sign of greater difficulty in getting NFT projects sold as the market struggles.
Beyond the industry’s woes, one company — Yuga Labs — seems to stand out ahead of the competition when it comes to NFTs. The firm behind the Bored Ape Yacht Club, Otherside, CryptoPunks and Meebits projects makes up just over 30 percent of the market’s overall sales volume, accounting for no less than US$2.5 billion.
Nevertheless, given the current context, followers of these new digital assets seem less willing to take risks in terms of their investments.
(Main and featured image: ArtemisDiana/ Shutterstock)
This story was published via AFP.