The NFT sector is experiencing a sharp drop in sales volume. ― Shutterstock pic
Friday, 29 Jul 2022 8:09 AM MYT
SAN FRANCISCO, July 29 ― NFTs are feeling the full force of the difficulties currently facing the cryptocurrency market. Investors are keen about buying these non-fungible tokens, especially since many have lost money in the field in recent months. As a result of these challenging times, NFT resale profits have dropped by around 46 per cent.
The NFT industry continues to be impacted by the downturn in the cryptocurrency market. In its latest report regarding the second quarter of 2022, Nonfungible.com ― a site that specializes in analysing the NFT market ― reveals a significant decline in resale profits.
In the first quarter, asset resales generated US$3.5 billion (RM15.6 billion) in profits for investors. Unfortunately for them, the second quarter saw a steep decline, with only US$1.8 billion in capital gains ― a drop of about 46 per cent.
NFTs are essentially unique digital files that can take the form of a piece of art, a virtual plot of land, a photo, a video or even weapons in a video game. Each token is registered on the blockchain, guaranteeing its authenticity and storing all relevant information available since its creation. In fact, each token has unique characteristics preventing it from being interchangeable.
Yuga Labs, the industry’s flagship
“The market is experiencing a historical bearish period,” said Nonfungible.com in a statement. “Liquidity is down and prices are very affected by the fall in value of cryptocurrencies. For the first time in the history of NFTs, trading-related activities are no longer profitable.”
Other data available in the report shows a rise in loss-making sales of nearly 23 per cent. As such, investors seem less confident in the ability of some NFTs to rebound. Moreover, the average holding period for these digital assets increased from 30.9 days to 47.9 days between Q1 and Q2 2022. This is likely a sign of greater difficulty in getting NFT projects sold as the market struggles.
Beyond the industry’s woes, one company ― Yuga Labs ― seems to stand out ahead of the competition when it comes to NFTs. The firm behind the Bored Ape Yacht Club, Otherside, CryptoPunks and Meebits projects makes up just over 30 per cent of the market’s overall sales volume, accounting for no less than US$2.5 billion.
Given the current context, followers of these new digital assets seem less willing to take risks in terms of their investments. ― ETX Studio