The NFT market has been a hot topic of discussion in recent years, with many people questioning its value and sustainability. Last week, it was revealed that 95% of non-fungible tokens (NFTs) are considered worthless, which comes as no surprise to those who have been following the market closely.
Experienced investors and traders in the NFT space understand that the market runs in cycles, with periods of high demand and excitement followed by periods of low activity and disinterest. During the hot phases of the market, NFTs can fetch high prices and generate a lot of attention. However, when the market cools down, most NFTs become illiquid and fade into obscurity.
The inflated supply of NFTs contributes to their decreasing value. As more and more NFTs are created, the pool of potential buyers becomes diluted, leading to decreased demand and ultimately lower values. It’s estimated that around 95% of NFTs become worthless during these cycles, which is why the recent headlines about their lack of value are not surprising to those in the know.
However, there’s a more important story to be told about the NFT ecosystem. While it’s true that a large portion of NFTs hold little to no value, what’s more significant is that 94% of the market’s overall value has disappeared. Just as it wouldn’t make sense to measure the stock market based on the number of worthless stocks, it’s equally misleading to judge the NFT market solely by the number of worthless NFTs.
Instead, the focus should be on the top collections in the NFT market, which represent a majority of the value. Just as the S&P 500 is used as a proxy for the stock market, the Forkast 500 NFT Index tracks the most valuable NFT collections across different blockchains. This index reveals that the NFT market has lost nearly 94% of its value since its peak in 2022.
However, it’s worth noting that this decline in value doesn’t necessarily mean that NFTs as a whole are failing. When compared to data from 2020, there are some interesting trends. The number of unique buyers has increased by 10,100%, sales have gone up by 31,837%, and total transactions have seen a whopping increase of 52,304%. Despite a decline in trade profits, collectors and traders have not abandoned the NFT economy, indicating their continued belief in the power of NFTs as a technology and their potential for the future.
Taking a closer look at recent NFT market trends, last week marked the fifth consecutive week of declining NFT sales. However, there are signs of stabilization, with overall numbers comparable to those seen in May and June 2021. The next milestone to watch for is a potential decline to the US$30 million to US$55 million range, similar to what was observed in early 2021.
In terms of specific collections, Solana had its first top ten collection since Tensorians made the elite list one month ago, thanks to Reavers’ new mint. Nakamigos delivered their Cloaks mint as a free claim for holders, with the remaining unclaimed NFTs sold for 0.05 ETH. The secondary market saw increased activity, with NFTs selling for an average of US$276 on September 24. Ethereum remains the dominant blockchain for NFTs, nearly outselling the other top ten collections combined, which generated just over US$38 million in sales. Other platforms like Polygon and Solana also had notable collections that garnered attention and trading activity.
Despite the fluctuations in the NFT market, it’s important to recognize that it is an evolving technology with the potential for significant impact in various industries. While the value of individual NFTs may fluctuate, the underlying technology and its ability to enable unique ownership and digital scarcity remain valuable and world-changing. The conversation surrounding NFTs has shifted, and it’s crucial to consider the bigger picture when assessing their worth and potential.
