Before we go down the rabbit hole of NFTs. Let me ask you a serious existential question. Is death a bad thing? Why are we instinctively associating it with negative sentiment? Yes, probably NFTs are dying. But death is a necessary part of evolution. From it, new life flourishes into existence. NFTs have been around since 2014. They broke the internet only in 2021 and became a gold rush. So, are we at the end of an NFT era in 2023?
-Are NFTs finally on their death bed or deep inside their graves?
-How can one possibly know for sure that NFTs are dead?
Read on to end the NFT death controversy once and for all.
NFT Market Statistics As Of 2023
Before we claim that NFTs are dying, let’s see how they’ve been doing so far – money wise.
From 2021 to this date in 2023, 100.16 K NFT collections were created.
- 2021 → NFT Boom → The year of BAYC → Few were creating NFTs
- 2022 → NFT Rollercoaster → Extreme Success then Market Crash → Everyone creating NFTs
- 2023 → NFT Cliff → Started with a boom then deflated → everyone then very few creating NFTs
In the past three years → 42.71 million NFT sales happened → totaling 77.25 billion dollars
- 2021 → NFT Boom → 9.12 million sales → 16.68 billion dollars
- 2022 → NFT Rollercoaster → 25.7 million sales → 53.55 billion dollars
- 2023 → NFT Cliff → 7.89 million sales → 7 billion dollars
According to the data from IntotheBlock, it’s clear that:
2021 and up till Q3 of 2022 → the golden age of NFTs →money spent on NFTs like crazy
Comparing numbers from those years to where we are now, despite the strong head-start 2023 had, NFTs are considered dying. However, keep in mind that 7 billion dollars have already been traded in the span of 6 months from 2023.
Is Ethereum Dying?
Now before we come to a concise conclusion, let’s take a quick look on the backbone of NFTs. Ethereum. Won’t make this too long because we’re not here to know if Ethereum is dying.
However, it’s important to note that Ethereum hasn’t dipped below $1,000 since January of 2021. We can harmlessly say that Ethereum has been stable above $1,000 for three years now. Not to mention that despite the crypto winter of 2023, Ethereum flew up above $2,000 in the mid of April. The highest it ever got since May 2022 – before the first market crash. There is a future for Ethereum , whether it’s NFTs or something else entirely.
Money-making wise , compared to the previous two years, NFTs are dying. However, NFTs are still profitable and ETH is not going below $1,000 anytime soon.
The NFT market cooled off considerably since hitting its peak in 2021.During the NFT boom NFTs were selling for millions of dollars. Clearly the graphs above and every metric shows that the market is still in the grips of a brutal crypto winter.
The market for NFTs has gotten smaller. But it not dead (yet).
Yes, it used to do billions of dollars a month in volume and now it’s merely hundreds of millions. But hey, that’s still A LOT OF MONEY!
If NFTs Are Dying, Why Are People Buying?
Simplest answer is : NFTs still make people A LOT OF MONEY. Yes it has become impossible to launch new NFT projects and profit. Probably the last successful “new” blue-chip NFT project was Valhalla. Everything else went downhill from there. In the below charts, we can watch the Blue chip NFT index sink below oblivion. Also, marketplace trade volumes less than ever. That alone screams “NFTs are dying!” but people still buy them.
Concerning Blue-chip NFTs, it has definitely been a matter of smart business in 2023. Now that NFTs aged well over two years, it’ not enough to hold the blue status. Projects have to deliver. That’s why Doodles, Moonbirds, and CloneX – once magnificent – are all around 2 ETH floor price each.
Yuga Labs are ever so driven to cement the BAYC ecosystem in everyone. They keep creating new games, experiences and offer an endless loop of NFTs. That’s one way to stay at the top, and it’s working for them. However, there’s another way one particular bluechip NFT stays afloat. Pudgy Penguins innovated NFTs with their interesting approach to bridging web2 and web3 with physical toys.
Another direct answer to why people are still buying NFTs is BLUR. This marketplace is creating an army of money-greedy soldiers eager to conquer. Farming, lending, and whatever means possible , Blur succeeded in creating ruthless NFT trading activities. To a point where it was accused of wash trading.
The chart from Nansen above shows that Blur has successfully dethroned OpenSea in terms of trade volume. However, in recent months that money-craze is fading. BUT in May alone trading NFTs was at a volume of 500K ETH. It’s still a lot of money don’t you think?
Buying a rock for $250k = one of the true flexes out there
We dove into @EtherRock on our show after the weekend's 130 ETH sale
There have been 3 other sales this year, all in the 75-130 ETH range
It's the ultimate "I don't GAF" NFT.
— NFTstatistics.eth (@punk9059) June 7, 2023
Like seriously, last week a damn NFT rock sold for $250K. You can’t say NFTs are dying when there are people still interested in trading NFTs. If something is dying here, it’s NFT hype. And honestly, it’s about time the bubble burst.
Why Is NFT Hype Dying?
Because it’s natural. How long did you stay crazy over Game of Thrones’ pathetic disaster of an ending? Your grandma knew of GOT’s disappointing ending. The internet exploded. We were breathing fire instead of air. But look at us now, did you even think of it until I mentioned it? Hype has an expiration date.
Here are 6 reasons to why NFTs hype is dying.
1- Oversupply and Low Quality:
2021 → Popularity of NFTs grew.
→ thousands of new projects and millions of new tokens were created → flooding the market
2022 → NFTs kept being pumped like crazy.
→ Many of these projects lacked originality, creativity, or utility (They were simply created to cash in on the NFT craze)
Eventually, in 2023 the result was evident:
worthless NFTs→ dilution of NFTs value → decrease in demand → loss of confidence and interest among buyers → NFTs are dying.
2- Complicated Market Cycles:
Honestly if NFTs are dying it’s because of how hard it is to trade them and understand the market cycles. One need to keep up with market analytics , follow good NFT influencers , evaluate NFT metrics, live in Discords…and it’s a hassle.
NFTs are dying but crypto and NFT scams will live eternal. These scams come for everyone and not only the newbies. Major names in crypto space faced all type of scams.
To mention a few incidents :
4- Unclear Legal Regulations:
There’s a huge lack of clarity and consistency in the legal and tax treatment of NFTs.
Different jurisdictions have different rules and regulations regarding the creation, ownership, transfer, and taxation of NFTs, which can create confusion and risk for both sellers and buyers. Check this guide to know more.
5- NFT Utility
What can an NFT offer? If we’re not buying it as digital art, then what is it for? Some NFTs were simply a craze and have absolutely no use-case. NFT utility is very much tied up with the existential question of WHAT IS AN NFT HOLDER? Is it an investment, product, share, or something else?
If you own an NFT is it because it has :
(A) a utility profiting you long-term (Investment)
(B) an emotional attachment to a project (Part of a community)
That makes most confused as to Why should a get an NFT? What is it offering me?
6- Royalty Fee Debates
Royalty fees have been the greatest gift from blockchain technology and NFTs. BUT, money-greedy marketplaces wreck havoc on creators’ earnings and art. I’ll let this thread do the talking.
Getting rid of creators fees was literally a catalyst that just destroyed the entire nft space, the literal only entity it’s benefiting is blur aka VCs
No traders are befitting from NFT volume completely dying and pumps on NFTs being impossible to sustain due to 0 fees
— Prince of PulseChain | Manifesting | Gh0Stly Gh0st (@DextMoon) June 9, 2023
Are NFTs Dying OR Morphing?
The media loves to eulogize the downfall of any once-big thing. But tell me , how are NFTs dying when more than $480 million worth of NFTs exchanged hands in the past 30 days? However, the NFT hype bubble is long dead. Decline in NFT activity is part of a natural market cycle that affects any new and emerging technology or industry.
After an initial phase of hype and excitement
→ there’s a period of correction and consolidation
→ the market weeds out weak and unsustainable projects
→rewards strong and innovative ones
→ It is followed by a phase of maturity and growth
→ where the market stabilizes and reaches a wider and more mainstream audience.
But PLEASE, let’s stop talking about NFTs like money-making machines and focus on what they can usefully do for us. NFTs can transform how we interact with both the virtual and physical world. NFT technology has the possibility to transform a handful of industries. NFTs are morphing to their true potential, check it out here.