September 25, 2023
By Sharan Kaur Phillora
The once-booming Non-Fungible Tokens (NFT) market is now facing a stark downturn, with nearly 95% of NFT collections currently holding no market value, reveals a comprehensive study by dappGambl. Of the 73,257 NFT collections surveyed, 69,795 have a market capitalization of zero Ethereum (ETH).
Here’s what we know:
DappGambl’s report, based on data sourced from NFT Scan, indicates a grave imbalance in the NFT ecosystem. About 80% of NFT collections remain unsold, suggesting a glut in NFT production vastly outweighs the market demand. This mismatch underscores the speculative nature of the market, where hopeful pricing strategies aren’t supported by real trading data.
While dappGambl didn’t detail specific collections, their research highlights that many NFTs suffer from weak adoption rates. They attribute this to ambiguous use cases, lack of compelling narratives, or genuine artistic merit. More alarmingly, 195,699 NFT collections appear ownerless. The environmental impact of minting these ownerless tokens is comparable to the carbon output of 4,061 passengers flying from England to New Zealand.
The market’s pricing anomalies further shed light on its speculative nature. Although some rare NFTs boast astronomical price tags, the reality is bleak. About 41% of NFTs are valued between $5 and $100, with less than 1% priced over $6,000. Eighteen percent of top NFT collections, as recognized by CoinMarketCap, even bear a floor price of zero, highlighting the struggle even among reputed collections to maintain demand.
This downturn doesn’t just affect individual NFT holders. High-profile attempts to capitalize on the NFT craze, such as Melania Trump’s NFT endeavor or Canon USA’s anticipated Cadabra marketplace, have faltered or failed to launch. Yet, the onus of this downturn isn’t solely on market dynamics. The environmental implications of crypto and NFTs, particularly their significant carbon footprint, have been a growing concern, further fueling skepticism around these digital assets.
In reflection, dappGambl’s report serves as a sobering reality check, emphasizing caution for those navigating the unpredictable waters of NFTs. While the market offered revolutionary prospects for digital asset ownership and monetization, it remains rife with speculation and volatility.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.