Despite the decline in value, some major institutions continue to invest heavily in NFTs. Over the past two years, the cryptocurrency market has shown that Non-Fungible Tokens (NFTs) are a volatile and fluctuating investment, despite the significant damage to the sector.
Challenges in the NFT Market
The NFT market, which witnessed an incredible bull movement in 2021 and 2022 with a monthly transaction volume of approximately $3 billion recorded in August 2021, has experienced a sharp and negative transformation in its fortunes. Recent data obtained from The Block revealed that the weekly transaction volume in July 2023 was approximately $80 million. This figure represents only 3% of the peak value in August 2021.
In particular, a recent study by crypto analytics firm dappGambl, which analyzed over 73,000 NFT collections, showed that 95% of these collections had zero Ethereum (ETH) market value. The firm wrote, “After examining these figures, we estimate that this 95% includes over 23 million people whose investments are now worthless.”
One of the most significant results of the study was that 79% of all NFT collections remained unsold, creating an excess supply in the market. Despite this excess supply leading to a buyer’s market, it failed to reignite enthusiasm among collectors and investors.
Predictions for NFTs
Despite the challenges facing the NFT market, some experts believe that there is still a glimmer of hope. On Friday, prominent crypto analyst Krypto Kaleo expressed his hope that the NFT market is approaching a period of activity.
Drawing parallels with previous crypto trends, he predicted that 2021 and 2022 resemble a “test rally” similar to the altcoin market during the ICO frenzy in 2017. Kaleo’s view suggests that after a consolidation and recalibration period, the NFT market could see a revival in 2024 and 2025.
Currently, everyone thinks NFTs are dead, and it seems like more people will never come back. I am eagerly awaiting the market to prove them wrong once again.
However, in an environment where interest in NFTs has waned, it appears that institutional players known for their tendency to invest cautiously continue to invest in the NFT sector. This week, companies such as PayPal, SONY, Formula One, Fidelity Investments, and Japanese electronics giant Fujitsu have filed four patent applications related to NFTs, Layer-2 (L2) solutions, and metaverse technology.
