NFT Prices Plummet as Crypto Investors Shift Focus to Bitcoin and Ethereum ETFs
In a market driven by rising optimism around Bitcoin (BTC) and Ethereum (ETH), the non-fungible token (NFT) market is witnessing a decline in popularity. NFTs, which encompass digital artwork and collectibles recorded on blockchains, have recently experienced a notable loss of appeal.
According to a Bloomberg report, Google searches for NFTs have reached their lowest levels since 2021, when these tokens first gained mainstream attention.
The struggles in the NFT market are further highlighted by a significant drop in sales. Researcher DappRadar reveals that NFT sales have decreased by more than six percent to $8.5 billion in the first five months of this year compared to the same period last year. This decline sharply contrasts the industry’s peak in January 2022, when it recorded an impressive $17.2 billion in NFT sales within a single month.
The declining sentiment around NFTs intensified last month when the US Securities and Exchange Commission (SEC) initiated steps towards approving exchange-traded funds (ETFs) directly investing in Ethereum. In anticipation of this approval, some investors reportedly began reallocating their investments into ETH while divesting from NFTs.
Nicolas Lallement, co-founder of NFT data tracker NFT Price Floor, explains that capital rotation is common in crypto markets, with Ethereum likely to continue attracting and absorbing market capital, leading to price drops for other assets like NFTs.
Throughout this year, many popular NFT collections have experienced significant price declines. NFT Price Floor reports that prices for these collections are down by 40 percent to 50 percent year-to-date. CryptoPunks, a collection minted on the Ethereum network, is trading around 2021 levels and has dropped by 29% from its lowest point last year. Similarly, collections such as Bored Ape Yacht Club (BAYC) and Chromie Squiggle have seen their price floors, based on Ethereum, decrease to approximately half of what they were at the lowest point of last year.
Daniel Maegaard, an NFT collector, confirms that most NFT collections continue to decline or remain stagnant after the peak euphoria observed in 2021. Maegaard has recently sold several blue-chip NFTs, including works by digital artists XCOPY, Hackatao, and Coldie. While some NFT art collections, such as XCOPY’s, have posted positive returns over the past 90 days, Lallement says the overall trend points to a market correction.
Despite the challenges faced by the NFT market, the NFT marketplace Magic Eden has shown resilience. The platform has been gaining market share as trading activity on its platform has increased. However, trading activity has decreased since recording record volume in April, according to Sara Gherghelas, an analyst at DappRadar.
In summary, the current state of the non-fungible token market reflects a decline in popularity and prices. While some individual collections have shown positive returns, overall market sentiment suggests a continuation of the NFT market correction. ETH is currently trading at $3,480, following Bitcoin’s lead, with a sharp 5% drop in the past 24 hours and over 8% in the past seven days.