The non-fungible token (NFT) market faced another challenging month, according to a recent report by DappRadar, raising questions about the market’s potential recovery.
During July, NFT trading volume saw a significant 29% decline, totaling $632 million, and the total number of NFT sales experienced a 23% drop, amounting to 3.7 million. These figures follow a prior report from DappRadar that indicated a 38% decrease in NFT trading volume during the second quarter of this year.
The downward trend in the NFT market has been persistent. In June, the sector saw a 44% reduction in daily active wallets, and in May, NFT trading volume declined by 44% as well. In July, the contraction continued, with a 19% decrease in daily unique active wallets, reaching 70,338, accounting for only 4% of the total industry activity.
The challenges in the NFT market are not isolated; the decentralized finance (DeFi) sector also encountered a slight setback with a 2.27% decrease in the total value locked (TVL), which now stands at $75.91 billion. However, the challenges faced by the DeFi sector are unlikely to alleviate the concerns of NFT traders.
Blockchain analyst Sara Gherghelas, a contributor to the research, attributed part of the market’s struggles to the overall downturn since the latter half of 2022, which has been closely linked to the fluctuations in Bitcoin (BTC) and Ethereum (ETH) prices. Additionally, Gherghelas pointed out the impact of excessive hype and speculation leading to scams and doubts regarding the value of NFTs.
Gherghelas remarked that the NFT market had cooled significantly in 2023, with trading volume falling over 90% since its peak in January 2022, and the average NFT price dropping by about 70%.
Pavel Bains, the CEO of Bluzelle, maintained a more optimistic stance, foreseeing the possibility of NFTs eventually replacing player-owned assets, such as in-game skins. Bains highlighted the expanding real-world applications of NFTs as a potential catalyst for renewed enthusiasm in the market.
Yet, the decline in interest in profile picture (PFP) NFTs and the decreasing floor price for prominent brands like Bored Ape Yacht Club (BAYC) indicate challenges for the NFT space. Amid waning PFP interest, the industry is looking towards utility NFTs and use cases like ticketing to demonstrate the technology’s broader value beyond collectible digital assets.
