According to the website NonFungible (which keeps statistics on the NFT market), sales of non-exchangeable tokens, or NFTs, have fallen to an average of 19,000 per day in recent weeks, down 92% from a peak of 225,000 per day in September.
The number of active wallets used in transactions on sites that sell NFTs fell 88%, to about 14,000 last week from a high of 119,000 in November.
If this were an exchange, we’d call it a total collapse. Or if we were talking about trends, a complete destruction of any interest in the subject.
But is everything really that bad with NFT?
Let’s start by looking at the negative aspect. Namely the economics. And in particular supply and demand.
According to analyst company Chainalysis, there are about five NFTs for every active buyer. According to the company, as of the end of April, 9.2 million NFTs had been sold and 1.8 million people had bought them.
As we can see, there is a dominant position of supply over demand. You do not have to be an expert to understand that when there are several times more goods than people who want to buy them, this leads to a decrease in the value of the goods.
And for NFT this is critical.
Why, you may ask? The fact is that according to earlier studies 9 out of 10 buyers bought NFT for speculation – buy cheaper, sell dearer. Not focusing on the aesthetic side of the purchased NFTs.
In a situation when you have bought something and then you have no one to sell it to, not just for more expensive, but even for the same price, the very fact of doing business loses its attractiveness.
It can probably be compared to the once hysteria with dot-com.
Is the demand for NFT finally going to disappear?
It is difficult to prognosticate how the NFT market will behave in the context of speculation right now. After all, the main reason for the decline in interest is a high rise in inflation in many countries. People are trying to invest in the real economy, using traditional investment tools. As you can see now falling and Bitcoin.
With the stabilization of economies it is quite possible that the excitement around speculative schemes of acquiring NFT will return.
But the most important thing is that now there is a direction for which NFT was invented. This is when there is a certain value behind an NFT.
For example, New York artist Jeff Koons is selling a series of NFTs that are tied to an actual sculpture expected to be sent to the moon at the end of the year.
Also, with the NFTs, their owners will have exclusive access to a screening of Kevin Smith’s “Here Was Killroy.”
The famous band The Crystal Method sells NFTs tied to the opportunity to dine with the band and go backstage during a concert.
That is, the demand and supply of NFTs that give you some kind of exclusive opportunity in real life is gaining momentum. Or used in some digital project, participating in its life.
In my opinion, NFT as a phenomenon is not going to disappear. There is no telling how popular it will be, but the technology itself will be in demand.