The nonfungible token (NFT) sector has seen an explosion of interest all throughout 2021 and the month of August witnessed record-breaking trading volumes as one-of-a-kind digital collectibles sold for prices in excess of $1 million dollars on a regular basis.
As is usually the case in the cryptocurrency ecosystem, hot sectors can cool down in the span of mere hours or days and this appears to be the case for the NFT sector.
NFT sales volume by platform. Source: Dune Analytics
According to data from Dune Analytics, the total volume of NFTs traded on the top NFT marketplaces has seen a significant decline since Sept. 2 and the sector was especially hard hit by this week’s Bitcoin-led market correction.
This decline in volume is reflected in the data for the top five NFT projects traded on OpenSea, where all have seen a significant decrease. Loot is the one exception, but the project is a relative newcomer and was also involved in a $70,000 airdrop for holders last week.
Top 5 NFT projects by volume. Source: OpenSea
The floor price for NFTs has also seen a large drop and data from Dune Analytics shows that at their peak, the price floor was 1.02 Ether but has since declined to 0.37 Ether amid the wider market pullback and the temporary declining interest in NFTs.
NFT floor price tracker. Source: Dune Analytics
It is worth noting that this metric can be somewhat misleading as the price floor can be impacted by newer projects being listed on the market and selling for lower prices.
For many of the top projects, such as CryptoPunks and EtherRocks, high-priced sales are still occurring and this indicates that the demand for premium projects remains high.
It is also important to remember that the NFT sector, as a whole, is still in its infancy and is just now beginning to work itself into mainstream conversations.
A good example of this momentum can be found in the ongoing auction for 101 Bored Ape NFTs at Sotheby’s, which has already seen one of the rare collectibles sell for a record 600 Ether (ETH) worth $2.25 million at the time of sale. This suggests that demand for premium projects remains high and that NFT prices could recover as the wider crypto market bounces back.
Christie’s is also supporting the continued growth of the NFT sector by hosting an upcoming Art Blocks Curated auction that is scheduled to take place on October 1.
With well-known and established institutions throwing their backing behind the nascent NFT sector, it’s likely that the pace of mainstream adoption could continue and the current pullback is simply part of the usual crypto market cycles.
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