The NFT market is down, and here is why

Have you ever wondered why the NFT market has been down lately? In what way has one of the most profitable markets, in which both beginners and experienced investors were willing to invest, now seems to have lost its importance? Is the NFT market down, as many enthusiasts and the media speculate?

First of all, non-fungible tokens, or as the world knows them better under the abbreviation “NFTs,” have experienced a huge boom and popularity since 2020. They have become one of the most loved investments in the crypto world for a long time.

Therefore, the main question is whether and how the NFT market may be down. Is the NFT market dying, and why are NFT prices dropping? To answer all these questions, you must familiarize yourself with what NFT actually represents and how it became valuable, and then understand what happened in the famous nft market!

The Emergence and Rise of Non-Fungible Tokens

NFT, or Non-Fungible Tokens represents the way of proving that one specific digital item is unique. Nobody can reproduce or copy that unique digital asset without the consent of its owner. Many people view them as digital certificates of authenticity, digital proof of ownership, and modern-day collectibles.

Enthusiastic investors buy and sell them online and store them on Blockchain, a distributive ledger. From photos, videos, audio files, memes, GIFs, tweets, and even real estate, NFTs can be almost anything. They use Blockchain, the same technology used by cryptos such as Bitcoin, to keep a ledger and record of all tokens permanently, along with those who own them.

Emergence and evolution of NFTs

A Non-Fungible Token first appeared in May 2014. . ItAnil Dash and Kevin McCoy created the first known Non-Fungible Token were a particular video clip by McCoy’s wife, Jennifer. Initially, NFTs were using the first ERC-721 standard for non-fungible digital assets.

In October 2015, Etheria was the first NFT project launched and shown in London at DEVCON 1. The first developer conference of Ethereum happened just three months after the launch of the Ethereum blockchain.

Evolution of NFTs from 2017 to 2022.

In 2017, when the ERC-721 standard helped NFT achieve wider usage, the online game CryptoKitties, where people could sell tradable cat NFTs, became a huge worldwide success.

Three years later, in 2020, the NFT market grew exponentially, tripling its value to the incredible amount of $250 million. During the first trimester of 2021, on NFTs, people spent more than $200 million, and the number of trademark apps jumped to more than 1200.

As of January 2022, when it comes to NFTs, there were more than 450 NFT-related apps that the Patent and Trademark Office received. So, why is the NFT market down exactly? How come that one extremely successful market in recent years experienced a fall, as they say? Let’s see what happens!

How and why is the NFT market down exactly?

Some experts say that the NFT market is down by “every possible metric” you can think of. It seems that amid the famous “crypto winter,” NFTs are struggling. People are wondering how the blossoming NFT market went down by every trackable metric lately and how it happened.

From gaming to art in general, the NFT trading volume across every sector has plunged approximately 90% since last year, according to information from relevant crypto websites.

This data is devastating, considering that the entire NFT industry has earned more than $1 billion in trading weeks since it emerged. Its passionate collectors, traders, speculators, and admirers have managed to obtain coveted digital collectibles and turn them into a fantastic profits.

Besides that, it helped them “show off” and gain a certain status among their fellow crypto devotees.

The result of high inflation and a weak stock market

Why is the NFT market down? Can it best be described as high inflation and a weak stock market? The market clearly showed no signs of rebounding any time soon. The “crypto winter” has settled on the red-hot market that witnessed the rise of several multi-billion dollar companies such as OpenSea, Dapper Labs, and Yuga Labs.

The struggles and reasons that slowed the NFT market down are a sign that blockchain-based digital collectibles represent bull-market luxuries rather than 100% secure investments that are inflation-resistant.

Is the NFT market down completely?

Across the board, i.e., in global, Non-Fungible Tokens are down. When it comes to the gaming industry that has been using NFTs for a long time now, such as Gods Unchained and Axie Infinity games, all the sales went down by 93%.

This data is the result of year-over*year. In general, non-fungible tokens used in games are mostly used for ownership of in-game assets and different playable characters.

In the art industry, primarily with the NFT collections such as Bored Ape Yacht Club and CryptoPunks, NFT trading volumes decreased about 80% compared to the previous year and more than 94% from its highest peak a couple of months ago.

NFTs on the OpenSea platform

Numerous non-fungible tokens are bought and sold on the famous OpenSea platform. It’s known as the most reliable p2p marketplace. In September 2021, OpenSea’s trading volume plummeted from $3 billion to only $350 million this September (2022).

According to third-party data from the famous Block, it was a devastating 88% drop. The OpenSea CEO, Devin Finzer, wrote the blog post on the “NFT market down” subject, claiming that the trajectory and the long-term promise of non-fungible tokens is one where the “addressable market” is, strictly speaking, each person in the world. According to him, 50% of Americans still haven’t heard of NFTs.

The NFT market downturn is a major opportunity for NFTs.

On the other hand, Li Jin, the Venture capitalist, also commented on the NFT market crash, stating that that situation could lead to a more practical and better NFT market in the coming years.

The NFT market downturn could be a major opportunity for NFTs in general. It could take them from collectibles, i.e., collected and speculated on assets, to those that people will use in everyday life.

More popular use cases for NFTs in the future

According to predictions by the Atelier Ventures and Variant investment firms, NFTs could have much more popular use cases in years to come. They could become the “soulbound” NFTs, which means that they could be presenting one’s digital identity.

In addition, NFTs in the future could ensure membership or voting rights in decentralized communities and track in-game assets. According to the managing partner of the SuperLayer crypto venture company, Mahesh Vellanki, the current situation on the market will wipe out numerous NFT projects before even getting to the stage for industry recovery. It’s especially the case with the new blockchains like Solana. Vellanki wrote that NFTs are down. However, the NFT market is changing. He said that the world is witnessing more competition; thus, more creative NFT projects are getting developed on a wider scale of chains.

Why are NFT prices going down?

Another main question regarding the NFT market down is why are the NFT prices plunging? In the recent month, the total NFT market cap dropped 40%, which is $2.3 billion. Even though it’s still a large sum, the alarming stats are the 25% increase in NFTs sales volume.

The reason for that crash that also led to the NFT market slowing down is that NFTs are, after all, risky assets, even though the technology behind them is truly revolutionary. , prices for all risky assets, including Non-Fungible Tokens, are under pressure due to the Federal Reserve’s raises in interest rates.

Remember that safe investment, such as short-term bonds, are what higher interest rates make. They are also more attractive to various investors. Cryptos, stocks, and NFTs are the “risky stuff,” resulting in money getting sucked from them.

The main plan of the Fed is to keep raising interest rates to more than 4% by the end of 2022. However, as long as interest rates are on their rise, NFT prices will keep going down.

Is it a good time to invest in NFTs nowadays?

For those wondering, “Is the NFT market really down nowadays” you can see that it is true. However, the current situation could lead to a more successful NFT market in every sense of the word. All crypto experts in the industry and those keen on owning valuable NFTs say to hold on with investments in the Non-Fungible Tokens.

Their advice is to wait until the inflation comes down. Once that happens, all NFT enthusiasts could expect interest rates to stop rising. The result will be the movement of the main headwind for the NFT market.

When that happens, everyone will be able to find the best NFT collections worth investing in, where the floor price will be down 65% or more compared to their all-time high!

Therefore, it’s best to be patient and wait for the best NFT opportunities! Even though non-fungible tokens are known to be “risky investments,” you could still earn a lot of profit from the valuable NFT opportunities. Just wait for the storm to pass on the NFT market, and good luck with investing in the future days!