Rapture #163: NFT Bear Market
Well, it looks like my gut reaction in the final paragraph of January 31st's Rapture #127 regarding NFTs peaking is largely playing out. While NFTs were bucking the downward trend of crypto markets overall for December and January, they are undoubtedly crashing as I type. In January 10th's Rapture #106, I outlined how I had zero faith that NFTs would be able to survive a greater crypto bear market.
NFTs remind me of the altcoins of the 2017 era, which rose about 1 - 3 months even after BTC peaked in December 2017 before crashing to goblin town for years.
Top NFT Collections Significantly Down
The top collections have not been able to avoid this broader NFT market drawdown. While the index tracked by Nansen shows a drop of 28% in the past 30 days, the "blue chip" (lol) collections individually are also down a significant amount.
BAYC (Bored Ape Yacht Clubs) are down close to 40% in terms of floor prices for the past 30 days, while CryptoPunks are down nearly 20% in terms of floor prices for the past 30 days. Clone X's floor prices are also down approximately 40% in the past 30 days.
Volume also Tanking
Price is not the only metric going down for NFTs. Trade volumes for NFTs have plummeted, especially since the beginning of February. Weekly volumes for last week were approximately $40 million, which is the lowest level since the last week of May 2021.
The top collections themselves are also seeing significantly less volume. BAYC's 30 day sales volume is down more than 65%, while CryptoPunk's 30 day sales volume is down nearly 30%. The CryptoSlam global NFT index displays an approximately 45% drop in sales volume during the past 30 days.
Clearly, buying interest in NFTs is drying up.
Searches for NFTs have fallen off a cliff
Search interest for NFTs peaked in late January. Currently, there is just 1/3 the search interest for NFTs compared to the end of January.
People are just not as interested in learning about NFTs right now, and the drop in search interest indicates the masses have waning NFT interest.
Takeaways
The crypto markets are looking increasingly bearish, and NFTs are no exception to that sentiment.
I think NFT collections will go far lower if the bear market in the crypto markets overall sustains (which I have outlined many times before that I think it will) than many expect today because of the illiquidity issues.
Crypto thrives on innovation. While NFTs had their mainstream moment in the first half of last year, there has been little innovation to sustain interest. Collections, marketplaces, financialization features, exhibits, the social aspects, and far more need to be iterated upon in order to sustainably attract mainstream users.
Now, that is super easy for me to say from my armchair over here, especially since I have no horse in the race, but it does not change the reality.
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