Recent statistics don’t bode well for the future of non-fungible tokens (NFTs). The monthly trading volume in NFTs has collapsed, with a 97 percent plunge from its trading peak earlier this year.
While NFT trading volume reached a record high of $17 billion in January, it fell to $466 million by September, as reported by Bloomberg. Other aspects of the NFT market have seen similar downturns in recent month as well. In August, Open Sea, the largest NFT marketplace, suffered a 99 percent decrease 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 respectively fallen by 53 percent and 20 percent, from peaks in May and July.
“It was pretty obvious 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 like Coinbase, BlockFLi, Gemini and Crypto.com experiencing mass layoffs.
Despite the downturn, a recent NFT sale brought in over $4 million
However, Baronchelli said he doesn’t believe this signifies the end of NFTs. “I don’t think we’re going towards an extinction of the market,” he said.
Recently, a CryptoPunks NFT sold for $4.5 million on Sept. 28. “It’s not how it used to be, but it’s not dead,” said Baronchelli. “It’s not a low number, it’s actually a little surprising.” He added that the royalty benefits for artists and usefulness when it comes to issues of provenance remain important advantages of NFTs for the art world.
Others are less positive 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 are 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’s backing 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 like art criticism and history don’t seem to matter as much anymore.
“I don’t think any of this stuff is leaving the art world, I don’t even know if we should call it the art world anymore. Now, it’s just whatever we can profit off by next week.”