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Is this the final stop of the NFT gravy train? Bloomberg suggests that it is. Floor prices of NFTs have been on a gradual decline. But many still remain hopeful as they see this period as an opportunity to buy-in. Many believe this storm will pass and have held onto their NFTs with their dear lives, while others have been rushing to cash in.
So, are we beginning to see the burst of the NFT bubble or are we just seeing fluctuations?
Here are the facts.
According to NFT tracker NonFungible, the average trading value of NFTs dropped from $6,900 to $2,000 USD. This low point has made some people cut their losses — one user lost $67.8K USD after selling their Bored Ape Yacht Club NFT at $224K USD. However, the overall sales of Bored Ape Yacht Club NFTs increased 59%, so while floor prices have dropped, demand has risen. Cryptopunks saw a rise in sales by 118%. The volume of NFTs traded among peers has declined, but sales have increased. This could mean that fewer new NFTs are entering the market, and popular NFTs are becoming more established.
The invasion of Ukraine has taken some attention away from NFTs, leading to a drop in activities. Since the first day of Russia’s invasion, the average price of NFTs dropped by about 30%. It’s still unclear whether this is a causal effect or a correlation. Besides conflict in Ukraine, political scrutiny is also believed to be a contributing factor to dropping prices. Countries across the world are implementing new regulations for cryptocurrencies and crypto-assets (NFTs) in efforts to eliminate crypto-related fraud. Potential buyers may be waiting for more clarity on these new regulations and have thus paused trading.
Since the very beginning, many have claimed NFTs have no intrinsic value. Much of the NFT economy thus far has relied on hype — media, fashion brands, celebrity endorsements and the like. NFTs have no fundamental value other than the fact that you can sell them to other people for more money. This fact, along with the fact that the NFT market feels saturated could suggest that people are starting to lose interest in NFTs altogether.
“What I would say is the last week or so has seen a significant decline — perhaps as much as 40 percent — in floor prices for the most desirable NFTs.”
— Aaron Brown, Bloomberg Writer
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