Sales of non-fungible tokens (NFTs) have slumped significantly in the third quarter, in both volume and size, as cryptocurrency markets continue to stagnate into the autumn.
Over the third quarter of 2022, total sales of NFTs amounted to $3.4 billion, according to data from decentralized application tracker DappRadar.
This represents a drop of more than half from the previous quarter’s $8.4 billion, and nearly two-thirds from the first quarter peak of $12.5 billion in total sales.
From a mid-Jan. peak of over 900,000, the number of weekly sales of NFTs have also halved, according to data from NonFungible.com. Even over the past three months, the number of sales have dropped over 50% to a daily average of just 23,000.
Rising inflation kills demand for NFTs
The popularity of NFTs exploded last year, spurred by the enthusiasm behind cryptocurrencies that saw total market capitalization reach $3 trillion at its peak in Nov. last year.
Utilizing blockchain technology, NFTs became a popular outlet for publishing media, including fine art, which was auctioned at some of the finest houses in the world.
However, squeezed by high inflation and rising interest rates, investors have abandoned riskier assets, including cryptocurrencies, which has subsequently affected NFT demand.
While NFT sales at auction houses such as Christie’s, Sotheby’s, Phillips and Bonhams totaled at $144 million during the heyday last year, that figure has barely managed to reach $9.5 million year to date, according to data from Art Market Research.
NFT market going though “consolidation period”
Meanwhile, OpenSea, the largest NFT marketplace, also saw its sales volume continue to trickle down for the fifth consecutive month.
Chief executive Devin Finzer underscored how the current crypto downturn differs from periods past in that it has intersected with a “macro economic downturn.” Consequently, he believes this new interaction could result in a lengthier period of instability than before.
For his part, the chief executive said his company was in a “good spot financially,” and described the current period as a “building phase.”
Other leaders throughout the crypto space have expressed a similar sentiment of the current downturn being a consolidation period.
Irina Haivas, a partner at venture capital firm Atomico, said it had weeded out crypto “tourists,” leaving only stronger firms in its wake.
Galaxy Digital founder Mike Novogratz said that crypto markets had become more resilient after those who were forced to sell have left the sector.
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