Trading volumes for nonfungible tokens (NFTs) has tumbled 97% since January, when the blockchain-bound digital art and collectibles market went from $17 billion to just $466 million in September, according to Bloomberg, citing data from Dune Analytics.
The dropoff in NFT interest is part of a wider, $2 trillion wipeout in crypto - which has come a long way from $69 million art auctions and Lamborghinis with crypto-themed license plates.
As ArtNet's Dorian Batycka wondered on Tuesday, will digital art collectors stay away?
From SNL to Snoop Dogg, NFTs quickly took popular culture by storm. Athletes and celebrities aped-in; some shilled and rug-pulled their fans. Others made genuine contributions to the space, like when Grammy award-winning producer Timbaland made NFTs of stems to his beats—buyers were given the rights to remix and profit from them.
Now, most of that initial hype has collapsed, thanks in part to the cantankerous crypto market. Pieces once bought for millions now barely muster a couple hundred thousand at auction. The auction platforms are not doing much better: OpenSea, the largest of them all, laid off 20 percent of its staff in July 2022. Sales volume is significantly down. An extremely muted sale earlier this year of generative art (digital art made with autonomous software) at Phillips showed that collectors are no longer as keen.
As the NFT art market faces a recalibration, what will become of the market for digital and physical art—the so-called “phygital”? -ArtNet
That said, NFT projects continue making headway - such as Yuga Labs, which last month announced a partnership with Tiffany's & Co. for 250 custom-made cryptopunk jeweled pendants which sold quickly for $50,000 each.
So, while things in crypto land certainly appear tumultuous at the moment, one has to wonder if the NFT space is due for a massive reflation once the fed restarts QE and digital currencies hit astronomical prices again.