- NFTs based on the Ethereum blockchain have seen double-digit losses.
- Shifting investor appetite, lack of utility, and high gas fees are key factors.
- Prices could begin to pick back up once money rotates out of top cryptocurrencies.
Ethereum, the world’s second-largest cryptocurrency, has been on a tear. The same can’t be said of non-fungible tokens, or NFTs, on the network.
Popular NFT collections, including DeGods, Azuki, Pudgy Penguins and Bored Ape Yacht Club, have seen double-digit losses over the past seven days.
Ethereum, meanwhile, is up 11% over the same period.
So what gives?
“We are witnessing the first real bear market for NFTs, revealing a decoupling from their underlying asset, Ethereum,” Alex Casassovici, founder of web3 streaming project Azarus, told DL News.
NFT trading volumes have plummeted about 66% from last year as investors turn to Bitcoin and Ethereum, both of which are in the throes of yet another dizzying rally, said Transak’s Gandon.
It is also likely due to rising fees on Ethereum, John Stefanidis, CEO and co-founder of crypto gaming startup Balthazar DAO, told DL News.
“When Ethereum’s price rises, it can lead to increased gas fees, disincentivising NFT trading,” he said. Data from Etherscan shows that transaction fees on the network have risen more than 350% since the start of the year.
NFT malaise
NFTs have struggled to regain momentum after they became swept up in a broader crypto market sell-off in 2022, further exacerbated by waning interest in the sector.
Arguably, the most popular NFT collection comes from Bored Ape Yacht Club, whose floor price has gradually declined from its May 1, 2022 peak of $600,000.
A floor price refers to the lowest price at which an NFT within a specific collection is currently listed on marketplaces like OpenSea and Blur.
Since March 6 of this year, the value of Bored Ape NFTs has declined 13%, while DeGods, another popular project, has fallen 34% over the same period.
“The current NFT narrative is more about utility NFTs you could use in blockchain games,” Etienne Gandon, business development analyst at crypto on-ramping firm Transak, told DL News.
That’s because the market is less focused on speculation of major NFT collections, which are more about showcasing one’s social status, he said.
“You need a lot of new entrants to drive prices up,” Gandon said. “Right now, we are not at this step.”
The outlook for NFTs could improve once the current surge in the broader cryptocurrency market subsides, argues Casassovici.
“Investors, always in search of new avenues for growth, may find the depressed floor prices of NFTs an attractive proposition. This potential pivot could reignite interest in NFTs, presenting an opportunity for recovery and growth,” he said.
Crypto market movers
- Bitcoin is up 1.2% in the last 24 hours, trading at $72,443
- Ethereum has followed suit, up 1% in the same period, priced at $4,044.
What we’re reading
- AI hype in crypto pushes Bittensor subnet fees by 10,000% — DL News
- EU Parliament Approves Stricter Rules To Combat Sanctions Including Crypto — Milk Road
- Gnosis Chain and ZKSync Have Already Upgraded to Be Compatible With Ethereum’s Upcoming Dencun Hard Fork — Unchained
- Why Bitcoin ETFs could ‘conquer’ gold ETFs within months — DL News
- Investors are buying Grayscale’s LINK fund at a 700% premium. Here’s why. — DL News
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.