Sales of non-fungible tokens (NFTs) experienced a significant decline in the third quarter, dropping by 60% compared to the previous quarter, according to blockchain tracker DappRadar. The decline is attributed to a combination of factors, including a cautious approach from crypto investors due to the anticipation of a crypto winter and decreasing demand for these highly speculative digital assets.
NFTs are blockchain-based assets that represent digital files such as images, videos, or items in online games. They gained immense popularity in 2021 as crypto investors sought to capitalize on rising prices. However, sales volumes have dwindled in recent months.
In the third quarter of 2022, NFT sales amounted to $3.4 billion, a significant decrease from the $8.4 billion recorded in the previous quarter and the peak of $12.5 billion seen in the first quarter. The decline can be attributed to the changing conditions in the market, with central banks raising interest rates, prompting investors to shed risky assets. Bitcoin, for instance, has dropped to around $19,000 from its peak of $69,000 in November.
The largest NFT marketplace, OpenSea, experienced a decline in sales for the fifth straight month in September. OpenSea’s CEO, Devin Finzer, acknowledges the challenges posed by the current environment, referring to it as a unique intersection of a macroeconomic downturn and a crypto winter. However, Finzer remains optimistic about the potential of NFTs in the long run, considering the downturn as a building phase.
According to market tracker NonFungible.com, the number of NFT buyers per week has more than halved since its peak in late January. Even the traditional art market, which initially embraced the NFT craze, has seen sales numbers dry up. NFT sales at prestigious auction houses such as Christie’s, Sotheby’s, Phillips, and Bonhams have only reached £8.4 million ($9.41 million) year to date, compared to £127 million during the same period last year.
The decline in NFT sales reflects the changing sentiment among investors and consumers. With the current market conditions and decreased interest in speculative digital assets, it remains to be seen how the NFT market will evolve in the coming months.
