Since reaching an all-time high in January this year, trading volumes in non-fungible tokens (NFTs), also known as digital art and collectibles recorded on the blockchain, have dropped by 97%.
The crash is in tandem with five months of consecutive decline as the interest around NFTs starts to wane. In particular, NFT monthly volume dropped to barely $466 million in September after reaching a high of $17 billion at the beginning of 2022, according to the statistics provided by hildobby on Dune Analytics.
NFT monthly volume falls 97% from highs. Source: Dune Analytics
As a result of rapidly tightening monetary policy, investment flows are being cut off from speculative assets, contributing to a bigger wipeout in the crypto industry, seeing roughly $2 trillion leave the market since its peak in November 2021.
Interest in NFTs on the wane
In August, Finbold first reported that trade activity for non-fungible tokens in Q2 had plummeted by 40% as digital collectibles’ interest dwindled. Footprint Analytics noted:
“In mid-May, the crypto market faced considerable challenges, and the NFT market cooled off. NFT trading volume dropped from $19.02 billion in Q1 to $11.26 billion in Q2.”
It was also found that OpenSea, the world’s largest NFTs marketplace, saw a significant decrease in the daily quantities of its trades. Trading volume on the NFT marketplace fell as low as $10.05 million as of August 26, the lowest since July 2021, marking a one-year low as the effects of the crypto winter take hold.
Elsewhere, in June, a survey found that the vast majority of customers, particularly 64.3% of persons surveyed, only purchased NFTs to “make money.” It probably shouldn’t come as a surprise that trading volume declined during the second quarter of 2022, given that more than half of investors purchase NFTs only for the purpose of increasing their financial position.