A third of NFT collections have been classified as “dead” by Nansen crypto analysts due to the low number of transactions.
The crypto analysts went on to explain that some of these NFTs or NFT collections have also fallen below their value since their inception, with some now trading below their minting price. Statistics from NonFungible also show that the sales volume of NFTs is also declining. At the beginning of February, the number of NFT sales was over 376,000, while in the last few days there have been less than 100,000 sales per day.
Many in the industry attribute the decline to the current conflict between Russia and Ukraine. Despite the declining trend, it is clear that the NFT market is still strong and useful as it also plays an important role in the current geopolitical crisis and many NFT projects are actively raising funds for Ukraine.
According to a recent Guardian report, the Ukrainian government plans to publish its own NFT collection.
This increasing number of failed NFT projects may remind some crypto analysts of the ICO bubble in 2018. Back then, numerous digital assets lost much of their value, while the authorities kept warning about the dangers associated with unregistered securities – or otherwise disguised tokens.
Despite big investments from celebs like Madonna, the data shows that the number of NFT sales is still declining. On Thursday, the pop singer shared via Twitter that she bought the Bored Ape for 180 ETH ($560,000). Madonna's manager Guy Oseary also represents Yuga Labs, the company behind Bored Ape Yacht Club (BAYC). The company was recently valued at $4 billion.
NFT boom: bubble or correction?
Over the past month, NFT trading volume has dropped by 40%, according to the aforementioned report. OpenSea saw a rapid decline in trading volume (67%) in February, according to DappRadar, after trading volume on the platform reached a new all-time high in January.
A look at the available data shows that the demand for NFTs is declining as the order size of new investors is small compared to that of previous investors. On the other hand, the total number of NFT buyers has increased compared to last year.
However, some savvy investors think this drop in selling doesn't indicate a perceived end to NFTs. Rather, the decline may be due to the ongoing political tensions around the world, which have drawn attention from this market.
NFTs undoubtedly still have great potential for gaming, art, and general commerce. The question remains: will the NFT market stabilize in the current phase of weakness?
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