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Crash and burn: Is the NFT market in decline?

Is the NFT boom over? Yes say some analysts, whereas others see consolidation and an eventual revival.

Driven by high-profile auctions, the market for NFTs exploded in 2021 with sales worth more than $40 billion, according to analytics firm Chainalysis
Driven by high-profile auctions, the market for NFTs exploded in 2021 with sales worth more than $40 billion, according to analytics firm Chainalysis - Copyright AFP/File Justin TALLIS
Driven by high-profile auctions, the market for NFTs exploded in 2021 with sales worth more than $40 billion, according to analytics firm Chainalysis - Copyright AFP/File Justin TALLIS

Multiple metrics and reports indicate that mass interest in non-fungible tokens (NFTs) and the metaverse are falling fast. Certainly NFT sales have decreased in recent months.

If Internet traffic is anything to go by, Google Trends statistics indicates that the number of searches for the term ‘NFT’ peaked at the end of January 2022, but user search interest has declined steadily since then.

This matched by sales, according to TechCrunch NFT global sales volume hit $4.6 billion in January, but declined almost 50 percent to $2.4 billion by the end of March 2022.

In addition, the average selling price of a non-fungible token has declined to under $2,000, compared with an all-time high of almost $6,900 on January 2, 2022.

NFTs are also expected to come under increased regulation, much like cryptocurrency in 2020. The U.S. Securities and Exchange Commission is scrutinizing creators of NFTs with a view to place more controls over the marketplace.

However, for the company Neon, the current situation presents an opportunity to take stock as the market recalibrates. After capitalizing on the NFT boom with the first NFT vending machine, Neon thinks that the hype cycle slowing down will mean that more valuable NFTs will rise to the top.

The art based vending machine launch was covered by Digital Journal. We wrote:

“Is it the ultimate in consumer convenience or a fancy alternative to gambling? Non-fungible tokens are now accessible via a vending machine, with the first such contraption installed in New York.”

Neon co-founder Jordan Birnholtz outlines this to Digital Journal: “We are seeing a shift happening in the NFT space that, through primary market forces or a general cooling on hysteria, will be a net positive for the space in the long term.”

As to what is next, Birnholtz foresees: “This cooling means people are beginning to develop a realistic view of the industry, and we’re excited because it’s promising for the future. It means two great shifts are happening in NFTs.”

These shifts are: “First, people are abandoning hype and FOMO in favor of real attachment to artists and creators. Second, it means people are focusing on building tokens with real utility, taking advantage of airdrops and mints, creating high value, well-made tokens.”

Birnholtz is predicting a renewed interest in the NFT market, this time with technology and art at the center rather than inflated hype.

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Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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