The recent regulatory actions taken by the Securities and Exchange Commission (SEC) against Impact Theory sent shockwaves through the non-fungible tokens (NFTs) market, catching many participants off guard. Predictions emerged that traders would hastily exit the market, and now, as the dust settles, it appears these forecasts were not unfounded. This week provides substantial confirmation that the NFT market’s inaugural phase is coming to a close.
While the NFT market’s decline has not been as severe as some anticipated, it is undeniable that it has suffered a setback. According to the Forkast 500 NFT Index, the global NFT market has experienced a 2.11% drop in value since the SEC’s charges became public knowledge. This decrease, although less steep than the previous two weeks’ declines of 3.67% and 5.81% for the weeks of August 21 and August 14, respectively, still indicates significant turbulence in the sector.
Individual high-value NFTs have not been immune to this downturn, with sellers recording substantial losses. Prominent examples include CryptoPunk #9842, which incurred a staggering $160,000 loss, Bored Ape #996 at a $212,000 loss, Bored Ape #8262 with a $300,000 loss, and Bored Ape #2530 selling at a $319,000 loss. A few sellers experienced substantial losses, amounting to a total of $11.9 million in the past week alone.
Additional metrics corroborate the view that NFT traders are increasingly exiting the market. In last week’s NFTs On Deck analysis, data indicated double-digit shifts in major categories. However, this week, which covers the period following the SEC’s announcement, only two out of seven categories display significant changes.
Wash trading has fallen to $29.8 million, while the number of unique sellers dropped to 216,723. These figures represent the lowest levels seen in 2023. Weekly transactions have also declined by 16.13% compared to the previous week, marking the fourth-lowest point this year. The lack of trader participation has caused global NFT sales to plummet to a 117-week low, with a meager $72.5 million in total sales.
August’s final statistics underscore a fundamental shift in the NFT market, signifying the dawn of a new chapter characterized by increased transactions but diminished sales. The month witnessed a record-high number of global transactions, exceeding 11 million in total. However, sales figures paint a different picture, reaching a new 30-month low at just $395 million, the second-lowest since January 2021’s $100 million in sales.
Sales, being the metric that resonates most with the public, tell a compelling story. August’s strikingly low sales figures in the modern NFT market serve as a clear signal that the initial chapter of NFTs has concluded, and we are now embarking on the second chapter. While this phase may lack the excitement of its predecessor, it is the foundation upon which future developments will be built, promising a payoff that those who persevere will ultimately appreciate.
