Cryptocurrency sector sales are plummeting, but hedge funds and lenders aren’t the only ones hard hit by the crypto winter. The NFT sector has also started to feel the chill.
Issues with hedge funds and cryptocurrency lenders took center stage in June, but the non-fungible token (NFT) market was also hit, with monthly sales below $1 billion for the first time in 12 months, according to NFT data aggregator CryptoSlam.
For the record, June of last year was the same as the explosion in popularity of Axie Infinity, which brought NFTs and Play-to-Earn games to prominence.
Collapse in cryptocurrency prices is partly to blame for weak NFT sales, but monthly unique buyers in June have also fallen almost 50% from a peak of over 1 million in January and are now now under 600,000 for the first time since July 2021.
In another telltale sign, the floor price of a Bored Ape Yacht Club – one of NFT’s largest collections – fell below $100,000 for the first time in over a year in mid-June, for reach $86,277. This represents a drop of almost 80% from the high of over $400,000 reached at the end of May.
“The NFT market has not been immune to the turmoil in the cryptocurrency (and corporate) market and, when coupled with the slowdown in the [finance traditionnelle] – especially the crash in tech stocks – it’s a perfect storm for loss of confidenceJonathon Miller, Australian managing director of cryptocurrency exchange Kraken, told Forkast.
Otherwise known as “crypto winter“, bitcoin and the total crypto market capitalization have fallen around 60% since the start of the year and more than 50% since the collapse of the algorithmic stablecoin project Terra in early May.
The 70% drop this year in the price of Ether, the world’s second largest cryptocurrency, has also influenced NFT trading, as it is the native token of Ethereum, the most popular blockchain for host the NFTs. Ether price traded around $1,055 on Monday.
However, after a volatile few weeks, cryptocurrency prices remained relatively flat over the weekend, with all major coins not fluctuating more than 1% in the 24 hours through Monday.
Bitcoin held around $19,300 over the weekend after falling below US$19,000 for the first time since December 2020 on Friday, to change hands at $19,133 today. Amid this NFT market downturn, Kraken is poised to join companies like Binance and Coinbase in opening the waitlist for its own NFT Marketplace slated for full launch in the coming months.
The middle of a crypto winter might seem like an inopportune time to launch such a product, but Miller said the NFT market remains as big an opportunity as crypto was 10 years ago, despite recent shocks. by the blockchain industry as a whole.
“The apparent collapse of closed blockchain lending companies can be seen in the long run as a reminder that transparent open infrastructure is ultimately the foundation on which a new wave of digital financial tools will be built.“said Miller.
“The projects and businesses that stay as true to this idea as possible are the ones that can weather the storm.“, he added.
Another way for NFT marketplaces or exchanges to stand out is to specialize and offer unique services, such as focusing on sports-based NFTs, according to Anndy Lian, Chief Digital Advisor, Organization of Mongolian productivity, and author of blockchain.
In an interview with Forkast, Lian, who also has experience in NFTs, added that the current sluggishness in the industry would mean crypto and NFTs would likely trade sideways for the remainder of the quarter, before a wave of renewed interest did hit in the fourth quarter, spurred on by the new blood entering the industry.
“I think the NFT market could recover faster than the original crypto market“, said Lian, pointing to the partnership agreements between Binance and Portuguese football player Cristiano Ronaldo as a sign of what is to come.
“All these moves, which may cost hundreds of millions, tell us that it will be a great strategy“, he added. “We can’t just depend on what you see in native crypto; you need to bring new blood“.