Not Fun Times for NFTs as Crypto Market Stalls

Tech Tumble

As part of a broader sell-off amid the Federal Reserve’s tightening monetary policy, the crypto sector has lost $2 trillion since its November 2021 high-water mark. That includes NFTs, also known as non-fungible tokens. In fact, the numbers are especially ugly for these digital collectibles and artwork stored on blockchains. According to data from Dune Analytics, this month’s NFT trading volumes were down 97% from their peak in January of this year. That translates to a more than $16 billion drop in trading volumes.

Fewer Users

Along with the decline in trading volume, it seems fewer people may be using NFTs. DappRadar, which tracks and analyzes decentralized digital operations, reports the number of users on NFT marketplace OpenSea are down around 5% this month.

There are a few potential issues that stand out for NFTs, in addition to the so-called “crypto winter” that has set in as rates have started to rise. One is the age-old tale of declining popularity. Bored Ape Yacht Club surged earlier this year and secured an official status as the NFT industry leader. Celebrities and professional athletes celebrated the Bored Apes on social media platforms. Now, competitors like Terraforms and CryptoPunks are ranked higher.

Additionally, NFTs are struggling to provide their users with optimal security, as hacking remains a concern. This involves the potential for users to fraudulently gain access to NFTs inside digital wallets, and then sell the digital assets for profit.

Growth Efforts

The NFT slowdown has extended to companies such as GameStop (GME) which launched a new NFT trading platform in July. An initial boom of users has since fizzled. OpenSea recently added the Optimism blockchain to its network as it hopes to boost people’s interest in trading NFTs.

Some companies appear to be keen on avoiding the term NFT altogether, even if their version is similar. Starbucks (SBUX) has floated a concept known as “stamps,” while Reddit announced the launch of “collectible avatars” in July. NFTs are still a new phenomenon with an uncertain future, but the numbers seem to suggest the initial bloom is off the digital rose.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

SOSS22092903