Bitrabo Editorial
NFTs made headlines from late 2020 until early 2022, experiencing a significant surge in popularity. By November 2020, global NFT sales reached approximately $8 million.
NFT Market Plummets: Is Now a Good Time to Invest?
Fast forward to early 2022, and NFT sales skyrocketed to over $6 billion, driven by ample market liquidity and low interest rates. Consequently, platforms like Bitcoin, Ethereum, Solana, and BNB Chain flourished during this period.
However, as of October 9, 2023, the NFT market has sharply declined, with sales dropping to just around $100 million. This figure is a fraction of the highs seen in January 2022 when popular NFTs like Bored Ape Yacht Club (BAYC) and CryptoPunks sold for astronomical prices.
Despite this downturn, one analyst believes that this could be an opportune moment to invest in NFTs. He notes that with the market down 92% from its January 2022 peaks, making a purchase now could be an “ultimate contrarian” move that might yield positive returns.
However, investing now carries inherent risks, especially as market conditions can fluctuate unpredictably. Data from CryptoSlam indicates that the number of unique buyers and sellers has diminished, signaling growing disinterest despite some price recoveries from late 2023 into early 2024.
In September alone, NFT sales decreased to $296 million from $373 million in August, marking a substantial drop from the $1.7 billion in December. If cryptocurrency prices continue to fall, NFT sales are likely to decline further.
Influence of Cryptocurrency Prices and Regulations
As per CryptoSlam, Ethereum is the leading platform for NFT transactions, accounting for over $44 billion in trades. In contrast, Solana and Flow trail significantly, with only $5.8 billion and $1.4 billion, respectively.
If Ethereum’s price dips below $2,100, as seen in August, the chances of NFT activity declining on the platform will likely increase.
Additionally, the NFT industry is facing increasing scrutiny from regulatory bodies, particularly the U.S. SEC. OpenSea received a Wells notice in late August, indicating the SEC’s intention to pursue legal action.