Since when the NFT market reached its peak in 2022the weekly trading volume in the non-fungible token sector is decreased by 97% compared to its all-time high, and many high-level blue-chip collections (and beyond) have seen their prices plummet from their all-time highs.
Well yes, compared to the numbers that have been the protagonists of various newspaper headlines in recent weeks following the release of a report on the topic, it must be understood that these are data that must be compared to the highest peak reached by NFTs.
For example. During the tulip bubble, these reached exorbitant prices and then, like every bubble, burst and values returned to normal. Does this mean that tulips have no value or market? Absolutely not.
The causes of the price collapse
It is certain that therefore a significant bubble occurred in 2021/2022 of NFT asset prices.
“Since 2020, with the continued easy market environment, incremental funds have flowed into the cryptocurrency market, including not only traditional cryptocurrencies and decentralized finance (DeFi) assets, but also new assets such as NFTs. Due to the unique to NFT assets, such as limited supply and ability to artificially create rarity, it was easy for speculative funds, creating a FOMO feeling in the market and leading to a significant bubble,” he explains Gracy Chenmanaging director of the crypto exchange Bitget, whose wallet can also store NFTs.
However, as global markets have tightened and funds have flowed out of the cryptocurrency market, NFTs have been sold off by market participants.
The NFT market has gradually become more transparent, and the scarcity of NFT projects has decreased. As NFT projects and the NFT trading market mature, the initial mystique and scarcity associated with NFTs has gradually faded. Intense competition between project teams and trading platforms has also eroded the first-mover advantage of early projects, leading to a gradual return to rationality in asset prices.
NFT project teams have struggled to continuously deliver products on their roadmap. Many top-tier blue-chip projects have failed to deliver products that satisfy the market, while excessive spending on marketing has led to a lack of funds needed for ongoing operations.
This lack of sustained attention and consumption by the market has inevitably led to a decline in prices and trading volumes for these projects.
The true value of NFTs
Given that therefore, not considering the maximum price reached by NFTs, values close to 90% will certainly not be reached at all, the value of NFTs lies above all in their technologya bit like we can also say about websites and what happened in the .com bubble.
“NFTs still offer several advantages as an asset class, such as the ability to establish ownership of digital art through non-fungible tokens, the return of royalties to creators in NFT transactions, thus providing ongoing income to artists, and l “emergence of collateralized lending projects based on NFT assets, among others. These represent several experiences facilitated by NFTs as a new type of asset. Although the short-term valuation of the NFT market takes time to adapt, I believe that, thanks to these characteristics, the NFT market will continue to develop significantly in the long term,” explains the Bitget spokesperson.