According to a Bloomberg report, NFT trading volume is down 97% from its peak in January.
In January 2022, the NFT market size is $17.2 billion. Also, an alarming rise since the NFT hype in 2021 with $4.2 billion in sales at its peak in August. But since the beginning of this year, the market has slowed down significantly, the enthusiasts have calmed down, and the market value of NFTs has plummeted by more than $2 trillion. Therefore, 466.9 million US dollars were traded in September.
This decline continued trends in the broader economy as regulators tightened interest rates. The NFT market has not been able to handle these trying times. Especially when fraud, theft, and new tax rules discourage tax collectors. As a result, the once thriving NFT business either collapses or falls short. Additionally, we experienced the crash of cryptocurrency exchange FTX, which added to the uncertainty even more.
In mid-July, OpenSea, the largest NFT marketplace, laid off 20% of its staff in a clear message that the crypto winter has officially begun.
Why is the NFT market going down?
Investors claim that the sharp drop in NFT trading volume indicates negative sentiment in the broader cryptocurrency ecosystem, however, it should not be interpreted as the end of the road for NFTs. In addition, the economic market as a whole suffers.
The cryptocurrency market has been trading below $1 billion for some time now as cryptocurrency prices continue to drop. However, investors believe that the negative sentiment will not last long. The market is cyclical and it is common for cryptocurrencies to be more volatile than the stock market.
Finally, cases of NFT applications continue to grow and a slowdown in volume is normal until companies can get back into the building process.