After reaching all-time highs, the NFT market is collapsing

Most of the NFT market indicators are down in the second quarter of 2022. Recall that the Non-fungible tokens(NFT) or “non-fungible tokens” in French, have sparked the crowd of crypto-investors in recent months, these digital works of art being a new medium of speculation.

However, with the complicated global economic environment linked to the war in Ukraine, the cryptocurrency market (bitcoin, ethereum, etc.) collapsed and the NFT market was not spared.

According to the NonFungible website, US dollar NFT transactions recorded a massive 25% decline between the first and second quarters of 2022, with a combined volume of approximately $ 8 billion.

On the positive side, however, this decrease is relatively modest compared to the trend in cryptocurrencies. In fact, the average price of NFTs dropped 6%, while the value of cryptocurrencies was almost divided by three over the same period!

Fewer buyers and sellers

In the second quarter, the number of buyers, sellers and the number of sales decreased.

Most NFT collections have actually lost interest in investors. In this context, it is becoming increasingly difficult to profit from digital works of art. Profit from resale fell 46% in the second quarter, for a total loss that increased 23% ($ 1.8 billion in profit to 1.4 billion in losses).

The collectibles segment has the highest resale loss rate, peaking at over $ 100 million per week. Paradoxically, collecting still had the most profitable sales of the quarter.

Ultimately, NFT trading posted a net profit of $ 460 million, down sharply from the first quarter ($ 2.3 billion). Very few new NFTs were issued this quarter, with overall supply growth of just 4%.

The digital artwork market has therefore radically changed in just one quarter. For NonFungible analysts, it’s time to focus again on what really brings long-term value, because “It is usually during bear markets that true value is built”.

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