Is the honeymoon over for NFTs?

Why the Powerful Forces That Run Faltering NFT Markets Won’t Let Prices Crash Just Yet

The numbers suggest the NFT market is cooling. But reports of its crash may be a bit overstated.

The market for these digital assets, which went gangbusters throughout 2021, is now showing signs of a cool-down. But it may not be crashing as dramatically as some reports claim, according to artnet news.

Buying and selling of NFTs began to slip in the first quarter of this year, dropping from $3.9 billion in transactions the week of February 13 to $964 million the week of March 13—the lowest weekly level since last summer, according to blockchain analytics firm Chainalysis.

Other clues: Since Coinbase launched its much-hyped NFT marketplace on May 4, NFT trading on the site has been sluggish. The platform, which is still in beta, has only recorded 1,013 sales worth a total of 148 ETH ($340,000) over the past week across a tiny pool of 1,200 users, Dune Analytics reports. This is after millions of people signed up for the project’s waiting list when it was announced in the fall.

Trading on OpenSea, the largest NFT marketplace, also appears to be slowing down. According to Dune, the volume of active monthly traders on the platform in March was the lowest it has been since June 2021, with less than 245,000 users. Compare that to January, when the platform saw 546,000 users.

Although it is not hard to find statistics associated with the NFT market, it is hard to interpret the numbers or know which ones to trust. Particularly because wash trading—the practice of users buying and selling the same item to themselves as a way to artificially inflate numbers—is widespread among crypto exchanges and NFT platforms.

And it’s easily done. “Many NFT trading platforms allow users to trade by simply connecting their wallet to the platform, with no need to identify themselves,” Chainalysis said in a February report that made national headlines.