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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.
According to DappRadar, NFT sales in the third quarter of 2022 were $3.4 billion, down from $8.4 billion in the second quarter and $12.5 billion at the market’s peak in the first quarter.
The nascent NFT market profited from rising cryptocurrency prices and investors’ high risk appetite in 2021, but these conditions have drastically changed in 2022 as rising central bank rates cause investors to shun risky assets. The price of bitcoin is currently about $19,000, down from its peak of $69,000 in November.
Devin Finzer, CEO of OpenSea, which is backed by investors including a16z, said, “I believe what’s unusual about this situation is it’s the junction of both the macro economic slump and the crypto winter.”
It is prudent to be careful about how long this could endure because “the prior crypto winters were a little more isolated to only crypto pricing.”
However, he said that the company is in a “strong financial place,” and he expressed excitement about the long-term potential of NFTs, referring to the current recession as a “building phase.” According to market watcher NonFungible.com, weekly NFT buyer numbers have more than halved from their peak in late January.
