Non-fungible tokens (NFT), which are most often associated with digital works of art or other collectible items, have lost much of their value since the wild start.
According to DappRadar data, monthly NFT trading volume dropped sharply by 81% from January 2022 to July 2023, with leading collections like Bored Ape Yacht Club and CryptoPunks hitting rock-bottom prices.
“As you look at the charts, everything is dropping. We don't know what to do or where to go,” said Lorenzo Melendez, president of NFT project Pudgy Penguins (offering digital images of penguins).
2022 was a tough year for NFTs due to a series of high-profile crashes and scandals in the crypto industry. However, while cryptocurrency recovered, non-fungible tokens failed to find support.
This not only affects investors: NFT platform Recur, backed by billionaire Steve Cohen, announced its closure in November due to "unforeseen problems and changes in the business landscape"; social media platform Nifty's, which collaborated with Warner Bros. on Looney Tunes NFTs, also announced a shutdown due to "a lack of investment opportunities"; and NFT platform OpenSea dealt a blow to creators by making royalty payments for secondary sales optional.
There is also fear of potential regulatory crackdowns - on Monday, the U.S. Securities and Exchange Commission took initial steps on NFTs, stating that tokens offered by a Los Angeles company were actually unregistered securities.
Despite NFTs existing for over 10 years, their development peak came in 2017 when Dapper Labs debuted with their CryptoKitties game. Several years later, the Bored Ape Yacht Club - a collection of cartoon monkeys - burst onto the scene, becoming a cultural sensation, and celebrities like Madonna, Paris Hilton, and Justin Bieber received their own versions of "bored apes." By the beginning of 2022, the frenzy had reached its peak, but since then the market has shifted course on almost all fronts.
“We're probably at the worst moment since the NFT mania began,” said Nicholas Lallament, co-founder of NFT Price Floor.
Source: Bloomberg
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