The NFT market is slowing as sales of non-fungible tokens fall after an initial surge early-2021. The blockchain-based digital assets experienced exponential growth in value and uptake in the first months of the year as high profile artists, musicians and public figures sold ownership rights via digital auction.
Reuters reports how OpenSea, one of the largest platforms in the NFT market, saw monthly revenue grow from $1million in spring 2020, to $8million in January 2021. After leaping to $150million by March, April saw a drop to $95million. Commentators believe this is a sign the overall NFT market is stabilising.
This was widely anticipated, with many predicting a period of calm would follow the frenzy. But others have painted a bleaker pitcher about the near future. Speaking to Yahoo! Finance, early Facebook and Coinbase investor Gary Vaynerchuk even suggested an “impending NFT winter of doom” was coming.
Multiple marketplaces show reduced demand
Numbers posted by Nifty Gateway, the NFT market from Gemini, also show slowdown. The platform’s sales fell more than half in the month to May 2021 — from $144million to $60.9million. But it is worth noting this remains far higher than January 2021’s total, $8.75million.
And The Athletic was quick to report on the U.S. National Basketball Association’s (NBA) Top Shot platform. Mirroring much of the NFT market, sales dipped by 137.9million between March and April, down 92.1million per month. Nevertheless, total unique buyers reached 324,000, far higher than 30,800 in January.
What this means for the NFT market
So how worried should investors and creatives be? A recent report by MarketWatch looks to alleviate some concerns. New technologies often follow a cycle of slow adoption, boom, fall, sustainable growth. Given how dizzying activity around NFTs has been, this theory makes sense. Especially given many projects have failed to grasp what makes non-fungible tokens so revolutionary, instead opting for gimmicky campaigns offering short shelf lives.
Pointing to Gartner’s Hype Circle, the article explains how the U.S. consulting firm has a system of measuring peaks and troughs in new tech to identify bandwagons and fads. As per this approach, we may be looking at the beginning of the end in terms of a “peak of inflated expectations” around NFTs. But this is just the next stage in the journey towards a “plateau of productivity” to come. And that’s good news for anyone involved, given accurate predictions of future growth are only possible when data isn’t skewed by temporarily heightened demand.