WHY THIS MATTERS IN BRIEF
As a society we love hype, buy into the hype, then forget to ask: What happens when that hype vanishes?
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In a warning about jumping on things at the first sign of hype according to a recent report by crypto platform dappGambl called “Dead NFTs: The Evolving Landscape of the NFT Market,” 95 percent of the tokens are practically worthless today. The company found that 69,795 of the 73,257 NFT collections analyzed now have a market cap of zero Ether.
In other words, 95 percent of NFT collectors — purchased by an estimated 23 million people — are holding onto the exclusive rights to JPGs that are effectively worth nothing.
“This daunting reality should serve as a sobering check on the euphoria that has often surrounded the NFT space,” dappGambl’s analysis reads. “Amid stories of digital art pieces selling for millions and overnight success stories, it is easy to overlook the fact that the market is fraught with pitfalls and potential losses.”
The tokens sprang into the limelight two years ago, with some sought-after tokens going for millions of dollars at the time. But interest has waned significantly, and prices have dropped precipitously. In July, the floor price of the Bored Ape Yacht Club collection sank to a historic low of below 30 ETH – roughly $58,700 at the time – which was the lowest it’d been since October 2021.
Since then, the floor price has only continued to sink, reaching depths of just 24 ETH at the time of writing, according to CoinGecko, or around $38,000.
It’s a moment of reckoning for the space, and the future of the tokens is uncertain as ever. Even filtering out just the top value NFTs, dappGambl found that 18 percent of these top collections had a market cap of zero Ether, indicating that even hyped-up collections have become effectively worthless.
That doesn’t necessarily mean NFTs have gone away completely, with the report suggesting that NFTs “still have a place in our future.” But to weather the storm, the tokens will have to prove they have inherent value, whether that’s from being culturally relevant or representing actual art, which is far easier said than done.
Meanwhile, crypto communities are seemingly in denial about the devastating downturn, with some Redditors arguing NFTs are still a bull market and that “now is the time to buy.”
Whether they’ll convince anyone and breathe new life into the space remains to be seen – but for now I’m not holding our breath.
