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NFT Market Witnesses Its Largest Drop in Two Years

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Photo: NFT Market Witnesses its Largest Drop in Two Years. Source: Collage The Gaze
Photo: NFT Market Witnesses its Largest Drop in Two Years. Source: Collage The Gaze

Over the past week, the non-fungible token (NFT) market has experienced its most significant decline in two years. The culmination of this drop came at the end of August when the weekly trading volume reached a mere $73.2 million. Compared to the peak of its popularity, where this volume reached around $1.8 billion, this is a striking decrease. The number of users engaging in NFT trading has also hit a two-year low, hovering around 50,000, according to market analysis on the Dune platform.

The research highlights that the majority of the weekly trading volume decrease is attributed to a substantial downturn on the NFT marketplace Blur. Specifically, 65.1% ($47.6 million) of the total volume corresponds to transactions on this platform, as opposed to 23.7% ($17.3 million) on OpenSea.

Prominent and popular collections of non-fungible tokens have also not remained unaffected by this trend. For instance, projects such as CryptoPunks, Bored Ape Yacht Club, Mutant Apes, and Azukis have all experienced significant drops in the minimum prices of their tokens, amounting to a decrease of several tens of percentage points over the last month.

A noticeable decline is also observed in the royalties for NFT creators, which have reached their lowest point in the past two years. This can be attributed to two factors. Firstly, royalties are directly linked to trading volumes, and naturally, with reduced volumes, the contribution of creators diminishes. Additionally, certain projects require fees for secondary transactions, which also impact the income of NFT creators. Secondly, the pressure on royalties has intensified due to some trading platforms making these payments optional, hoping to attract more traders to their platforms.

The deteriorating state of the NFT market is further exacerbated by cyberattacks. In just the month of June, NFTs were stolen totaling $2.27 million. It's worth noting that while this is the lowest figure for 2023, it's still quite substantial. According to analysts at PeckShield, perpetrators are capable of selling half of their stolen NFTs in under three hours, indicating their swift ability to dispose of ill-gotten gains.

Recently, the US Securities and Exchange Commission (SEC) accused Impact Theory, a company based in Los Angeles, of illegally selling NFTs in 2021 that the regulator classifies as unregistered securities. As a result, the company was fined $6 million.

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