MANY investors are betting that Bitcoin and Ether will set fresh highs this year, but there’s one corner of the cryptocurrency market that is getting the cold shoulder: non-fungible tokens (NFTs).
The tokens, better known as NFTs, which can be digital artwork of apes or other collectibles recorded on blockchains, are losing even more of their appeal. This month Google searches for NFTs hit their lowest level since 2021, when the tokens began to enter the mainstream, according to Google Trends.
In the first five months of the year, NFT sales are down by more than 6 per cent to US$8.5 billion from the same period a year ago, according to researcher DappRadar. In stark contrast, the industry sold US$17.2 billion of NFTs in one month back in January 2022 – its peak.
Sentiment worsened last month after the US Securities and Exchange Commission took its first step towards approving exchange-traded funds (ETFs) investing directly into Ether. In advance of an approval, some investors began moving into Ether, and dumping NFTs, said Nicolas Lallement, co-founder of data tracker NFT Price Floor.
“Crypto markets are all about capital rotation,” Lallement said. “It is foreseeable that Ethereum will continue attracting and absorbing market capital, and causing price drops in other assets.”
Year-to-date, prices for many popular NFT collections are down 40 to 50 per cent, according to NFT Price Floor. The floor price for CryptoPunks, which is minted on the Ethereum network and bought and sold with Ether, is around 2021 levels and is down 29 per cent from its lowest point of last year, when the market was so bad everyone thought the crypto-winter bottom hit. Popular collections such as Bored Ape Yacht Club and Chromie Squiggle, by Snowfro have price floors, based on Ether, that are about half of what they were at the lowest point of last year, said NFT Price Floor.
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“We are still seeing a majority of NFT collections continue to sell-off or remain flat after peak euphoria in 2021,” said Daniel Maegaard, a well-known NFT collector.
Maegaard said he sold a number of his blue-chip NFTs recently, including works by digital artists XCOPY, Hackatao and Coldie. Some NFT art collections from artists such as XCOPY posted positive returns over the last 90 days, according to Lallement.
Also prospering is NFT marketplace Magic Eden, which has been gaining market share as trading of tokens on its platform has picked up, according to Sara Gherghelas, an analyst at DappRadar. In April, it posted record volume, though it’s since decreased, according to DappRadar. BLOOMBERG
