Is the NFT market witnessing a downturn?

by James · October 15, 2022

The history of crypto market volatility proves that it is not a once-in-a-blue-moon event. It is difficult or impossible to predict the future performance of the overall crypto market.

The crypto market last year became hugely popular, with several major cryptos such as Bitcoin reaching their all-time highs. However, given the global economic slowdown and geopolitical turmoil this year dampening the broader financial market, the crypto market has also witnessed a decline in recent days.

Meanwhile, the growing popularity of cryptos also triggered several other trends such as non-fungible tokens or NFTs, metaverse, Web3, etc.

Let’s take a closer look at what NFT is and explore the recent performance of the overall NFT market:

Table of Contents

What is NFT?

As many of you already know, NFT stands for non-fungible tokens, primarily built through crypto’s same type of programming. In other words, the NFTs are based on blockchain technology, which cannot be traded or exchanged like other cryptographic assets.

It is a digital resource representing various types of collectibles, including art, music, games, etc., with authentic certification. Some examples of NFTs include pictures or digital collectibles, domain names, games, sneakers, or other fashion items.

By creating digital content as NFTs, creators enjoy the profits by publishing it on platforms where NFTs are traded. Many NFT exchanges work just like crypto exchanges. As OpenSea is an example of an NFT exchange.

Is the NFT market experiencing a downturn?

Sales of NFTs recorded a sharp decline in the last quarter as investors, as well as crypto market enthusiasts, traded on a cautious note amid a slowdown in the global market.

According to DappRadar, sales of NFT in Q3 2022 were USD 3.4 billion, down from USD 8.4 billion in the second quarter. NFT sales peaked at $12.5 billion in the opening quarter of the current fiscal, DappRadar added.

The NFT market experienced growth in 2021 as investors bet on digital currencies in hopes of higher returns, evidenced by the price jump. However, investors have moved to the sidelines with rising prices, the central bank’s interest rate hikes and harsh regulations of digital currencies.

In addition, sales at OpenSea fell for the fifth straight month through September, the company said.

Another report from Dune Analytics showed that the NFT market fell from its peak of $17 billion in early 2022 to around $470 million in the last month, representing a decline of around 97 percent.

Bottom line:

The risk and volatility is higher in digital assets and as mentioned earlier. So it is impossible to predict the market’s future performance. But given the recent conditions and analyzing the reports, the NFT market seems to be witnessing a decline.

The general crypto market is also no exception amid the gloomy sentiment in the broader market. But several analysts still expect the market to recover after the sharp declines witnessed in recent days.

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