NFT crash: 95% of the market is now ‘worthless’, study finds – as value of ‘Bored Ape’ artwork owned by Justin Bieber plummets by 97%
A new study has revealed that over 95 percent of non-fungible tokens (NFTs) created are now worthless, with many of the most hyped ones experiencing a drop of over 95 percent in value compared to the previous year. The study, conducted by crypto site dappGambl, identified 73,257 NFT collections, of which 69,795 have a market cap of zero. This means that approximately 23 million people are holding worthless assets in these collections.
Even among the 8,850 most valuable NFT collections by market cap, the study found that 18 percent of NFTs were worthless, and 41 percent were priced between $5 and $100. This indicates that the majority of NFTs are not living up to their initial hype and are experiencing significant value depreciation.
The study highlights several examples of significant drops in NFT values. For instance, a Bored Ape NFT bought by Justin Bieber in January 2022 for around $1.3 million is now worth approximately $37,000, reflecting a 97 percent decline. Other NFTs that were once valued in the tens of thousands of dollars are now worth less than ten.
Winter Bear #1178, an artwork that was sold for over $35,000 in 2021, is now worth approximately $6.50. Another NFT titled GOOP 7803 is currently valued at around $0.50. These drastic value reductions demonstrate the volatile nature of the NFT market.
NFTs gained significant popularity between 2021 and 2022, often being linked to pieces of online art. However, the study shows that the NFT craze has seemingly subsided. In January 2022, the monthly trading volume of the NFT marketplace reached approximately $5.36 billion. However, in August, the total volume dropped to just $410 million, less than 8 percent of the peak value.
The authors of the study emphasize the need for caution in the NFT space, stating that the market is filled with potential pitfalls and potential losses. Celebrities such as Madonna and Jay-Z have also experienced significant losses on their NFT investments. Madonna bought a Bored Ape NFT for around $470,000, but the highest offer made for it in recent months is around $50,000, representing an 89 percent drop.
Despite the current decline in value, the study suggests that NFTs could potentially experience a revival in the future. It highlights possible real-world applications for NFTs, including gaming, real estate, and digital identity. However, for now, the surplus of NFT supply over demand has resulted in a buyer’s market, with 79 percent of all NFT collections remaining unsold.
The study serves as a sobering reminder that the NFT market is not immune to volatility and potential losses. Investors should approach NFTs with caution and carefully assess the long-term value and potential risks associated with these digital collectibles.
