The NFT frenzy has been one of the top cultural events this year, however, after a short and very lucrative run, it seems the market is ready to crash.
A report by crypto news site Protos got a lot of traction last week after it claimed that the NFT market “imploded” in May. Is it true? Are NFTs already out the door?
For the uninitiated, NFTs, or non-fungible tokens, are unique and unforgeable digital assets that represent a wide range of tangible and intangible items. Since taking off this year, NFTs have dominated collectors and art worlds with record-shattering multi-million dollar sales. However, after a meteoric rise, new data suggests the NFT market has come back down to earth.
On May 3, for example, NFT sales peaked at $102 million in a single day. But according to data analyzed by Protos, just $19.4 million in NFT sales were processed in the first week of June. That's a very significant dip and marks a near 90% collapse.
However, according to Artnet News, yes, NFT sales may be slipping, but the market hasn’t imploded – at least, not yet. In fact, NFT industry insiders believe the Protos article was quite misleading.
“This article definitely tried to take down the NFT space, through the revelation of a hypothetical bubble burst,” Gauthier Zuppinger, the co-founder of Nonfungible.com, explained. “This is precisely the reason why we take our role as data providers and market analysts extremely seriously.”
If the numbers for NFT sales appear startlingly low, that is because the article only tracked on-chain transactions. Meanwhile, some of the biggest sales of crypto art – like the Beeple digital collage that sold at Christie’s for $69.3 million – generally happen off-chain, meaning they are not recorded on the public blockchain. Basically, the data excludes most of the recent surge of interest in NFTs from the fine art world.
All this is to say that the NFT market definitely appears to be cooling off, just not to the dramatic extent that Protos reports. But will it ever fully recover? We'll just have to wait and see.