The digital collectible market suffered a major decline in the second quarter of 2024, with sales hitting the lowest point since late last year. Data from CryptoSlam shows that non-fungible token (NFT) trading volume plunged 45% in Q2, falling to $2.24 billion. The decrease followed an initial surge from $2.9 billion in Q4 2023 to $4.1 billion in Q1 2024.
As Bitcoin falters from a high level, the NFT market is under major pressure. NFTs are a risky asset, and when liquidity dries up, prices seem to fall off a cliff.
Several factors could contribute to the downturn. These include consumers purchasing NFTs at discounted rates, a growing shift of interest towards Bitcoin and Ethereum ETFs, the prevalence of wash trading practices, and NFT market saturation.
Despite the ongoing downward trend, some NFT collections managed to score huge profits. With so many NFTs out there, some deal must be on offer.
High Fliers Shot Down
CryptoPunks, one of the earliest and most influential NFT projects, staged a remarkable comeback. It became the top-selling NFT collection of the week ending June 22, with a 155% surge in sales volume to reach $5.26 million.
DMarket from Mythos saw a slight decline of 9.21% in sales but still achieved over $4 million. Bored Ape Yacht Club (BAYC), an Ethereum-based project, secured third place with nearly $3.5 million in sales, marking a 73.66% increase from the previous week.
Solana-based NFTs set a new record with $5 billion in all-time sales volume in February, while Bitcoin-based NFTs climbed the rankings, recording $4.27 billion in sales by June.
Besides, one of the quarter’s remarkable events involved billionaire Mark Cuban, whose crypto wallet, linked to the Ethereum Name Service (ENS) domain “markcuban. eth,” became active after nearly two years of dormancy.
Cuban reportedly sold various high-profile NFTs, including EulerBeats Genesis and Pudgy Penguins. In just two days, Cuban’s wallet sold 14 NFTs worth approximately $38,533, with the highest-priced item being Pudgy Penguin #6239, which was sold for $30,578.
Bitcoin Could Extend Correction
The decline in NFT trading volume reflects the broader negative outlook for the cryptocurrency market. Analysts predict that Bitcoin could drop to $50,000, partly influenced by macroeconomic factors, such as the upcoming U.S. elections and changes in the Consumer Price Index (CPI).
Apart from macro, the recent transfers from large Bitcoin holders, including Mt. Gox and US governments could exacerbate the bearish momentum.
According to an announcement on Monday, Mt. Gox will start to repay its customers in July. The repayments are estimated at over $9 billion in cash, Bitcoin, and Bitcoin cash. This could increase selling pressure across the markets.
The German government’s recent transfer of 900 BTC, with 400 BTC moved to Coinbase and Kraken, and the US government’s alleged transfer of nearly 4,000 BTC to Coinbase, also adds more fears to the overall market sentiment.
According to CoinGecko, Bitcoin is trading at around $61,000, down 1.3% in the last 24 hours. The Bitcoin greed and fear index is currently at “fear.”
Bitcoin’s struggle to reclaim its key resistance level has triggered worries among investors and market analysts about the long-term viability of the NFT market.
However, the drop in sales doesn’t indicate that NFTs are disappearing. Instead, it highlights the increasing popularity of affordable NFT sales, making the space more accessible to a broader audience that may prefer starting with lower-cost options.
The NFT market experienced a significant downturn last month, with sales volumes dropping across major blockchains like Bitcoin, Ethereum and Solana. July may be better, but it would be smart to use caution in all digital assets.
In May, the NFT market recorded a total sales volume of $0.63 billion, marking a 41% decrease from April. Sales volumes across major blockchains also dropped notably, with Bitcoin experiencing a steep decline from $602 million to $194 million in May, a decrease of 68%.
