According to a report by Olga Kharif and James Tarmy for Bloomberg, the Non-Fungible Token (NFT) market is undergoing a severe downturn characterized by plummeting trading volumes and dwindling investor enthusiasm. Daniel Maegaard, a prominent NFT collector known by the pseudonym Seedphrase, has apparently been reducing his collection as the market has “completely tanked.”

Data from DappRadar, as cited by Bloomberg, indicates that the monthly trading volumes for NFTs dropped by 81% between January 2022 and July 2023. Concurrently, monthly sales figures have declined by 61%. Floor prices for renowned NFTs like Bored Ape Yacht Club and CryptoPunks have also reached more than two-year lows.

Lorenzo Melendez, president of the NFT project Pudgy Penguins, told Bloomberg that the market charts are uniformly negative. Both investors and sellers are grappling with the challenge of finding long-term value in these digital assets.

While the broader crypto market has shown signs of stabilization this year, NFTs have struggled. Bloomberg reports that NFT marketplace Recur is winding down due to “unforeseen challenges,” and Nifty’s, another platform, is also closing shop. Blur, a leading NFT marketplace, has seen its Ether-measured sales volume plummet by 96% between late June and early August.

Digital artists are also facing challenges. OpenSea, a major NFT marketplace, recently made royalties on secondary sales optional, causing concern among creators. Regulatory fears are also rising, with the U.S. Securities and Exchange Commission taking its first enforcement action against NFTs.

Despite the overall downturn, Bloomberg notes that some segments of the NFT market are still holding value. High-end artwork from renowned creators and low-value NFTs used in games continue to see demand. However, the overall sentiment in the market remains grim, with Melendez stating, “I think we have one very tough bottoming out left to go.”

According to Bloomberg, the decline in the NFT market has been attributed to various factors, including a shift from a collector-driven to a trader-driven market and a slump in the price of Blur’s native token, which has dropped 32% over the last 30 days. Per their report, even the term “NFT” is falling out of favor, with auction houses and projects now referring to them as “digital art” or “digital collectibles.”

Featured Image Credit: Midjourney