After an explosion in use between 2021 and 2022, the non-fungible tokens (NFTs) market collapsed. The segment has not only cooled down like the cryptocurrency market in general, but is leaving 95% of NFT holders with “useless” investments. This is what a recent report from dappGambl, a Web3 data analysis platform, pointed out.
As the company pointed out, NFTs reached almost US$2.8 billion in monthly trading volume in August 2021. However, this value plummeted to US$80 million in July 2023. In other words, a 97% drop .
From data provided by NFT Scan, the team compiled an analysis of over 73,000 NFT collections (73,257) in order to identify key trends, assess market health, determine factors that contribute to successful projects, and, gain insights into the potential future trajectory of the NFT ecosystem.
The vast majority of NFTs have no value
Of the 73,257 NFT collections the team identified, 69,795 of them have a market value of zero Ether (ETH). This means that 95% of people who own NFT collections are currently holding worthless investments. In practical terms, the number of investors “at a loss” is more than 23 million.
“Having analyzed these numbers, we would estimate that 95% includes more than 23 million people whose investments are now worthless. This highlights the incredibly high-risk nature of the NFT market and underscores the need for careful due diligence before making any purchases, especially high-value ones,” the team said.
dappGambl also found that 79% of all NFT collections – almost 4 in 5 – remained unsold. For analysts, this situation indicates a significant imbalance between the creation of new NFTs and the real demand for these digital assets.
As such, the team highlighted that projects that lack clear use cases, compelling narratives, or genuine artistic value are finding it increasingly difficult to attract attention and sales.
“It is a stark reminder that while the NFT space has introduced a revolutionary new model of digital asset ownership and monetization, it remains a highly speculative and volatile market. As such, both creators and investors must approach with caution, a clear strategy and a deep understanding of the risks involved”, he pointed out.
Low collection prices
Finally, the team analyzed the top 8,850 NFT collections according to CoinMarketCap and found that 18% of these collections have a minimum price of zero. In other words, a significant part, even of the most prominent collections, is in decline.
Additionally, 41% of top NFTs are modestly priced between $5 and $100. Just less than 1% of these NFTs boast a price tag greater than $6,000.
The team concluded that these statistics not only highlight the disparity between the upper echelons of the NFT world, but also serve as a stark reminder that, “despite all the glitz and allure, genuine value in this market can be elusive.”