NFT Market: Devastating Decline, Flickers of Hope

The market for non-fungible tokens (NFTs) is in shambles as critical metrics such as users, volumes, and liquidity velocity plummet, and several significant collections experience declines of at least 90%.

However, a few subsectors exhibit relative strength, as collectors and traders wager that generative art and historically significant collections will outperform in the long run.

According to the analytics platform Nansen, the total NFT trading volume decreased 49% month-over-month to 223,000 ether, or approximately $367 million.

In the past 90 days, total daily sales and active wallets have dropped.

While the macroenvironment is grim, the devastation is particularly pronounced in specific collections.

Azuki, a bull-run darling that helped creator Chiru Labs achieve a $300 million valuation, has dropped from a baseline price of 33 ether (ETH) to 3.9 ether (ETH).

Similarly, the Moonbirds collection, backed by Kevin Rose, has consistently declined from its April 2022 peak of 36 ETH to its current price of 1.29 ETH.

Amidst the devastation, merchants and collectors are beginning to form small strongholds.

The best-performing sector of the year, according to Nansen’s NFT indexes, is art, where the Nansen Art-20 index is down only 40% compared to other sectors, which are down 50% or more.

Among the Art-20 component collections, generative art is among the most prominent.

Chromie Squiggles, one of the first collections released by productive art center Artblocks, is only down 1.7% on a 30-day basis, while productive artist Mathcastles’s Terraforms is down 5%.

Similarly, historical collections are beginning to surpass youthful and formerly brilliant offerings. In December 2021, the floor price of the Bored Ape Yacht Club collection “flipped” or exceeded that of the Cryptopunks collection.

This was viewed at the time as a passing of the mantle to a group that had managed to dominate the bull market.

In March 2022, Yuga Labs, the creators of BAYC, acquired the intellectual property rights to CryptoPunks, solidifying this perception.

Nonetheless, as the decline in the market continues, CryptoPunks appear to have reclaimed their position as the premier NFT collection.

The current floor price for Punks is 47 ETH, compared to 27 ETH for BAYC.

Moreover, the higher tier rarity prices of CryptoPunks bolster the collection’s estimated market capitalization of 772,000,000 ETH relative to BAYC, which rests at 291,000,000 ETH, according to Nansen data.

As the NFT price collapse has intensified over the past month, the BAYC price floor has decreased by 24%, while CryptoPunks have declined by only 3.5%.

The Nansen NFT-500 index has fallen 56% this year, with no bottom in sight.