Updated: Oct 8, 2022
The once “ground-breaking” technology is down 99% from its all-time highs.
NFTs exploded in popularity in 2021, and that continued well into 2022. There were absurd stories of people buying JPEGs worth the price of literal mansions. Thousands of celebrities hopped on the bandwagon, shilling what inevitably always turned out to be scam projects (and unregistered securities) to their audiences, only to delete it all a month later and act like it didn’t happen. There was still a large portion of the world actively speaking out about how dumb it all is because, well, it was. However, there was still a massive portion of the world actively looking to rake in some easy money on anyone looking to cash in on the craze.
It looks like this might be coming to an end, though. Not only are some of the most popular NFT collections on the planet quickly plummeting in price, but the volume is down over 99% from its highs and dropping. At its highs, OpenSea had $2.7 billion in trading volume. For nearly the entire month of September, volume sat at under $10 million, with only 2 days last month above $10 million in volume. This is a 99% drop in volume from its all-time highs.
Many people attest this is just a phase like any other bear market, but that might not be the case. A 99% continued decline for a product that has struggled to find a use case and hated by tons of people doesn’t really bode well for that thesis. Not to mention, Bitcoin volume on a daily basis is about $20 billion, even after the decline. At its peak, it was around $50 billion. While that is still a decline, it’s still tens of billions of dollars, so it’d be hard to argue that it’s dead and there’s still plenty of money involved. $10 million dollars in the financial world is literally nothing. I don’t know of a single S&P 500 stock that gets less than $10 million in trading volume on most days. In fact, most individual stocks can easily reach tens of millions on slow days.
The question many people might be wondering then: Are NFTs dead? Even some of the largest NFT games like Axie Infinity and The Sandbox are quickly dying. Even if you spent the thousands that it takes to start generating realistic income in these games, it's not even profitable anymore because there's no sales volume, prices are tanking, and gas fees are still terrible. The largest players of Axie Infinity were actually people in the Philipines playing to supplement their income during covid, but if it's not profitable (and the game isn't fun) then people will not play the game. Axie Infinity boasted a massive 2.7 million active players in November of 2021. That number is now down to about 700,000 monthly players, resulting in a decline of about 75% in less than a year.
The underlying cryptocurrencies around these NFT games are similarly tanking in price. SAND, The Sandbox's crypto, is down to $.82 a token, which is down 90% from its highs. Axie infinity's token is also down 90% from its highs. After Axie Infinity's massive security breach resulting in hundreds of millions of dollars in stolen NFTs, most of the underlying NFTs were sold at pennies on the dollar, effectively tanking the prices of the community as well, and it hasn't recovered since. The floor price reached a high of $340, but today it's just $6. You'd pay more in gas fees to buy and sell it than you could likely earn.
Obviously, I cannot predict the future, but it isn't looking good. NFTs have consistently failed to find a use case and the fact that every transaction costs money is going to deter the overwhelming majority of people from using them for simple transactions like tickets or memberships. Any implementation of NFTs can be done without NFTs to the nearly exact same degree. I don't think the technology will completely die, but I doubt it's likely to fully recover.