According to blockchain tracker DappRadar, sales of non-fungible tokens fell precipitously in the third quarter as cryptocurrency investors prepared for a “crypto winter” and there are few signs that interest in the highly risky digital assets will increase. A type of blockchain-based asset known as a non-fungible token (NFT) stands in for a digital file, such as an image, video, or item in an online game. They gained enormous popularity in 2021 as wealthy cryptocurrency investors rushed to profit from increasing prices, but sales volumes have fallen recently.
The third quarter of 2022 saw $3.4 billion in NFT sales, down from $8.4 billion the previous quarter and $12.5 billion at the market’s peak in the first quarter of the year, DappRadar said.
While the nascent NFT market benefited from cryptocurrency price gains and high risk appetite among investors in 2021, these conditions have turned sharply in 2022, as central bank rate rises prompt investors to ditch risky assets. Bitcoin is trading around $19,000, down from its November peak of $69,000 .
“I think what’s unique about this environment is it’s the intersection of both the macro economic downturn and the crypto winter,” said Devin Finzer, CEO of OpenSea, which is backed by investors including a16z.
“The previous crypto winters were a little more isolated to just crypto prices so for that reason, I think it’s wise to be conservative about how long this could last.”
But he said the company is in a “good spot financially” and he is excited about the potential of NFTs in the longer-term, describing the downturn as a “building phase”.
Weekly NFT buyer numbers have more than halved from their peak in late January, according to market tracker NonFungible.com.
While the traditional art market was quick to embrace the craze, sales numbers have dried up, with NFT sales at Christie’s, Sotheby’s, Phillips and Bonhams combined at 8.4 million pounds ($9.41 million) year to date, down from 127 million pounds the same time last year, according to data from Art Market Research.
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