Recent statistics do not bode well for the future of non-fungible tokens (NFT). The monthly trading volume in NFTs has collapsed, with a 97 percent drop from the trading peak earlier this year.
While NFT trading volume hit a record $17 billion in January, it fell to $466 million by September, as reported by Bloomberg. Other aspects of the NFT market have also seen similar declines over the past month. In August, Open Sea, the largest NFT marketplace, saw a 99 percent drop in transactions, down to 9.34 million from 2.7 billion in May. And the prices of popular NFTs from Bored Ape Yacht Club and CryptoPunks have fallen by 53 percent and 20 percent, respectively, from their peaks in May and July.
“It was pretty obvious that there was a bubble element,” said Andrea Baronchelli, a professor at City University of London who studies the crypto and NFT space. The hype surrounding NFTs meant that a normalization and fall was inevitable,” Baronchelli said. The crisis in the cryptocurrency sector has also contributed to the decline, he said. Instability has plagued the market recently, with crypto companies such as Coinbase, BlockFLi, Gemini and Crypto.com having experienced mass redundancies.
Despite the decline, a recent NFT sale brought in over $4 million
However, Baronchelli said he doesn’t think this means the end of NFTs. “I don’t think we’re headed for market extinction,” he said.
Recently, a CryptoPunks NFT sold for $4.5 million on September 28th. “It’s not what it used to be, but it’s not dead,” Baronchelli said. “It’s not a low number, it’s actually a bit surprising.” He added that the royalty benefits for artists and the utility in terms of provenance remain important benefits of NFTs for the art world.
Others are less optimistic about the future of digital art. “I don’t really understand why NFTs are in the art world to begin with,” said Lisa Schiff, founder of art advisory firm SFA Advisory. She believes any artwork included in NFTs is overshadowed by the fact that NFT values are determined by how much people are willing to pay, as opposed to the quality of the art. “I don’t consider them art at all,” she said.
While Schiff said hype is all that supports NFTs, she doesn’t think they’re going away anytime soon. “The same mechanism has bled into the actual art world,” she said, adding that aspects such as art criticism and history don’t seem to matter as much anymore.
“I don’t think any of this is leaving the art world, I don’t even know if we’re going to call it the art world anymore. Now it’s just what we can earn by next week.”
