The market for non-fungible tokens (NFT) is at half mast. Following the sharp drop in Bitcoin and cryptocurrencies, investors lack the liquidity to invest in works of art certified on the blockchain. The situation would be temporary. Observers are counting on an explosion of the market in the years to come.
The non-fungible token (NFT) sector has grown to extraordinary proportions over the past year. The NFT market has exploded, leading to the birth of several unusual projects. Many Internet users, artists and investors have entered the digital asset market, mirroring many brands, including luxury brands like Gucci.
Despite the enthusiasm of video game companies and players, the market has calmed down significantly over the past few days. Most popular collections in the market, Mutant Ape Yacht Club (MAYC) and Bored Ape Yacht Club (BAYC), record a drop in transactions in recent days.
The decline of the NFT market, a domino effect linked to cryptocurrencies
Within 24 hours, trading volume for Bored Ape Yacht Club monkeys plummeted by 25%, shows NFTGo, one of the platforms that measures the evolution of the NFT market. Among the top ten collections by sales volume, only three show an increase in transactions.
The non-fungible token market is based on the cryptocurrency market. In this context, the collapse of NFT sales is linked to the sharp decline in the value of most digital currencies. Bitcoin, the doyenne of cryptocurrencies, fell back below the $33,000 mark, dragging all the altcoins in the market in its wake. Investors therefore lack the cash to buy NFTs at this time. Note that the fall in cryptocurrencies is directly due to the general decline in traditional financial markets, scalded by the US Federal Reserve’s rate cut.
This is not the first time that the NFT market has temporarily collapsed. By June 2021, the number of digital wallets dedicated to NFTs had already contracted sharply before rising againmimicking the cryptocurrency sector.
Despite this cooling, analysts expect the world of NFTs to continue to grow. According to estimates by Marketsandmarkets, an analysis firm, the market could expand by 35% per year. By 2027, the sector would represent $13.6 billion, against 3 billion currently. This is why many well-known companies are betting on non-fungible tokens. This is the case of Meta, which is preparing the integration of NFTs within Instagram.