Daily trading volume in OpenSea, the largest marketplace for non-forgeable tokens (NFTs), has plummeted from a peak of $323 million in August to about $52 million on Thursday, according to Dune Analytics.
The staggering decline seems to affirm the idea in some corners that the NFT market is a bubble that has burst. But some market watchers say the market is still vibrant and far from over.
“This does not mean that the NFT season has just ended,” wrote Ong Joo Kian, a research analyst at Delphi Digital, in a market commentary to clients.” There is still a lot of interest in this space.”
Ong said some hyped projects, such as the Mutant Ape Yacht Club, caused a “massive uptick” in NFT trading volume in late August, and the subsequent slowdown was no surprise.
Others say the NFT market has just hit a temporary plateau as it looks for the next big project to generate more cash and new users.
“It’s possible we’ve experienced a plateau in certain NFT categories, like pfp [profile picture design] or avatar NFT,” said Messari research analyst Mason Nystrom.” But it only takes one new and exciting project to help the market reach a new top.”
But observers don’t know what new NFT themes will spur a market recovery. Some recent projects have covered roughly the same ground.
“The number of projects with similar ideas – like those Loot torrents – has increased, but we’re not seeing more new players entering the NFT space,” Martha Zhang, founder of NFT platform StarryNift, told us.
According to OpenSea, the top NFTs by volume are Loot, CryptoPunks and Bored Ape Yacht Club. cryptoPunks has seen its daily trading volume drop by more than 90 percent. According to the NFT price floor, CryptoPunks’ floor price is currently around 90 Ether, down from its peak of 132 Ether in August. The floor price refers to the lowest price for any NFT within a category (in this case, the CryptoPunk series).
A month ago, OpenSea recorded record trading volumes in the launch of Pudgy Penguins and a host of other popular NFT projects. The hype surrounding these projects has greatly increased activity on OpenSea, a secondary marketplace for bidding and trading NFTs.
Sales of one of the most popular NFT programs, CryptoPunks, broke the NFT daily sales record on Aug. 23, shortly after credit card giant Visa entered the market and purchased one.
As the ethereum blockchain has become crowded, some NFT activity has spilled over to other Layer 1 blockchains, such as Solana, a trend that could slow NFT growth on ethereum as a result, Delphi’s Ong said. OpenSea continues to rank first, with more than 1,560 Ether ($5,467,148) of gas consumed in the last 24 hours to pay for transactions on the Ether blockchain, according to Dune Analytics.
Many Layer 1 blockchain projects, such as Solana, offer faster and lower transaction costs compared to Ether, which is attractive to the NFT market. The US version of cryptocurrency exchange FTX recently announced the launch of a minting platform for NFT built on both Ether and Solana.
“The NFT market will definitely continue to grow, [and] it’s just a matter of how fast and how volatile that growth is,” Messari’s Nystrom said.