Remember when NFTs sold for millions of dollars in 2020-2021 but in 2023 95% of NFTs dead and buried?
Are NFTs dead and buried?
A recent examination of the price dynamics across thousands of NFT collections strongly implies an affirmative answer.
Based on data from NFT Scan and CoinMarketCap, the analysis encompassed 73,257 NFT collections. Alarmingly, the findings revealed that 69,795 of these collections, representing just over 95%, possessed a market capitalization of zero ether.
The data suggests that nearly 23 million individuals hold these essentially worthless assets.
What is NFTs ?
NFTs, or non-fungible tokens, essentially function as digital certificates of authenticity, pointing to specific files, such as images or videos, and residing on a blockchain for unique identification and trade.
A few years back, some hailed them as heralding the dawn of a new decentralized internet era known as Web3. Some NFTs were sold for exorbitant sums, and several celebrities lent their endorsements to the trend.
However, critics raised a crucial point: when someone purchases an NFT, they typically don’t gain ownership of the actual file; they own the token itself. This is especially true for digital art, where the NFT essentially links to the file on the internet, while the original copyright remains with the creator. In practice, anyone can save and duplicate the file (though they wouldn’t possess it on the blockchain), and the link associated with the NFT could potentially be altered.
Regrettably, the overall outcome appears to be quite different from what proponents predicted. While many believed that NFTs would only appreciate in value for their owners, recent data suggests that the vast majority of them have plummeted in value, reaching near-worthless levels.
The researchers caution against the pervasive enthusiasm that has often engulfed the NFT sphere, emphasizing the stark reality. They stated, “This daunting reality should serve as a sobering reminder amidst the euphoria often associated with the NFT market. While tales of digital artworks fetching millions and instant success stories abound, it is vital to acknowledge the inherent risks and potential losses in this volatile market.”
NFTs, which are digital representations of art or collectibles tied to a blockchain, predominantly Ethereum, each bear a unique and irreplicable signature. The years 2021 and 2022 bore witness to an enormous bull run in the NFT market, culminating in a monthly trading volume reaching a staggering $2.8 billion at one point.
During this period, renowned collections like Bored Apes and CryptoPunks commanded prices in the millions, with celebrities like Stephen Curry and Snoop Dogg contributing to the fervor. This boom coincided with the peak of the cryptocurrency market, with Bitcoin trading at nearly $70,000. Presently, the crypto’s value hovers slightly above $27,000.
The study conducted by dappGambl unveils that a significant 79% of all NFT collections remain unsold or most NFTs dead and buried to limit the quality, contributing to a market oversupply that dampens enthusiasm. Even when filtering out lower-value and less prominent projects, the majority of collections hold limited value today. Among the top 8,850 collections by market capitalization, 18% are devoid of worth, and 41% are valued between $5 and $100.
Remarkably, less than 1% boast price tags exceeding $6,000, a stark contrast to the million-dollar deals that were commonplace just two years ago.
The NFT landscape has undeniably experienced a seismic shift from its 2021 highs. Yet, this evolving space is far from dead. As the market matures, NFTs are likely to increasingly pivot from mere collectibles to assets with tangible utility and significance.
In this ever-evolving space, the future of NFTs will be shaped not by speculation, but by the genuine value and utility that they bring to their holders.
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