An astonishing fact has been revealed, less than 1% of NFTs (Non-Fungible Tokens) are currently worth in excess of US$6,000. These unique digital assets, which once attracted huge attention, are now facing a harsh reality.
“For every NFT sold, there are four more that weren’t giving buyers ample choice on what they wanted to pick and at what price,” says a recent report from dappGambl, a website specializing in crypto product reviews.
During the heyday of cryptocurrency’s bull run just a couple of years ago, NFTs were everywhere, capturing headlines and imagination. Celebrities were shelling out millions to acquire NFTs featuring Bored Apes or digital copies of historic events like the completion of the World Wide Web’s code or Jack Dorsey’s first tweet on the platform now known as X.
In August 2021, NFT trade volumes soared to an unprecedented $2.8 billion. However, as the world began its return to pre-pandemic normalcy, the crypto frenzy waned, and with it, the valuation of NFTs plummeted.
Millions Left Holding Worthless Assets
To assess the current worth of NFTs in a world where they’ve largely fallen out of public discourse, dappGambl conducted an analysis of 73,257 NFT collections using platforms like NFT Scan and CoinMarketCap. A collection could comprise any number of NFT items, each individually tradable.
The findings were grim. Of the analyzed collections, a staggering 69,795 had a market cap of 0 Ether (ETH). These NFTs, held by approximately 23 million people globally, have now dwindled to complete worthlessness compared to their investments just two short years ago.
But what about the more popular NFTs, you might wonder? The analysis delved deeper into the top 8,850 collections according to CoinMarketMap and unveiled that 18 percent of them now had a floor price of zero. Meanwhile, 41 percent were priced between $5 and $100, and less than one percent held a value exceeding $6,000—a far cry from their multi-million-dollar valuations just 24 months ago.
The NFT Market Conundrum
One might assume that NFTs were closely tied to the rise and fall of cryptocurrencies. However, the unique technology underpinning NFTs, enabling ownership and authenticity certification, sets them apart. So, where did NFTs go awry?
The analysis suggests a supply-demand imbalance within the NFT market that widened as collectibles lost their sheen. For every NFT sold, four more languished unsold, creating an unbalanced buyer’s market flooded with choices.
Another factor contributing to this downfall was the inflated valuations of NFTs themselves. The report highlights the example of MacContract on Ethereum, with a floor price soaring over $13 million but only registering sales of $18. This glaring gap between floor prices and actual sales data underscores the lack of genuine buyer interest in many NFTs.
Additionally, like cryptocurrencies, NFTs faced scrutiny for their carbon footprint. While their emissions were a fraction of crypto coin mining, NFT mining still consumed over 27 million kWh of energy, equivalent to the annual emissions of more than 2,000 US homes.
NFTs: Not the End, but a New Beginning
Despite these challenges, dappGambl isn’t ready to declare this the end of NFTs. The website remains optimistic about the underlying technology’s potential applications in gaming, fractional ownership, digital identification, and tokenization of real estate deals.
