NFTs dominated headlines from late 2020 throughout 2021 before peaking in early 2022. By November 2020, the global NFT sales volume was around $8 million.
NFT Market Down 92% From January 2022 Peaks: Best Time To Invest?
However, roughly 13 months later, this had grown to over $6 billion. The rapid growth was pumped partly by the excess market liquidity due to record low interest rates. Due to the accommodative policy, Bitcoin, Ethereum, Solana, and even the BNB Chain ecosystems grew.
Fast forward two years later, and NFTs are in shambles and struggling. Throughout 2022 and 2023, the trajectory has been downward, looking at CryptoSlam data. When writing on October 9, the global sale volume for all NFTs was around $100 million in early October.
This figure is nothing compared to the climactic peak of January 2022 when top NFTs like Bored Ape Yacht Club (BAYC) and CryptoPunks sold for millions of dollars.
Although NFTs have been decimated, one analyst on X thinks this could be the best time to build and invest in these assets. With the market down, sliding 92% from January 2022 peaks and back to late 2020 levels, the analyst says the choice to buy is the “ultimate contrarian” and could turn out to be the “right bet.”
The decision, however, to load up now and even time the “perfect” bottom is risky. According to CryptoSlam, the number of unique buyers and sellers slows. Even though prices recovered from September 2023 to early Q1 2024, interest has been waning.
In September, sales fell to $296 million, shrinking from $373 million in August. It also marked a near 70% crash from the $1.7 billion recorded in December. If crypto prices continue to crash, sales will likely suffer.
Impact Of Crypto Prices And Regulations
According to Cryptoslam, Ethereum leads in NFT activity. Over $44 billion of NFTs have been traded on Ethereum, with only $5.8 billion in Solana and just $1 billion in Solana.4 billion on Flow.
For this reason, if ETH prices drop below $2,100 and August lows, the probability of NFT activity shrinking on the platform will be elevated.
Beyond prices, the industry faces more regulatory pressure from the United States SEC. OpenSea received a Wells notice in late August, signaling the regulator’s plan to sue.