A recent exhaustive study has revealed a startling decline in the value of Non-Fungible Tokens (NFTs), the one-time darlings of the digital asset universe. The research shows that a staggering 95% of all NFT collections now have a market value of zero, affecting nearly 23 million digital asset holders.
Once, the concept of NFTs captivated the internet and the cryptocurrency community. These unique digital assets, typically registered on a blockchain, serve as ownership certificates for various types of digital content. In 2021 and early 2022, the NFT market experienced an explosive growth, registering an impressive $2.8 billion in monthly trading volumes at its peak. High-value collections like Bored Apes and CryptoPunks lured celebrities and garnered millions in sales.
However, a study conducted by dappGambl has exposed a grim reality: of the more than 73,000 NFT collections they examined, 95% are now valued at zero ether, the cryptocurrency commonly used for NFT transactions. This nosedive in valuation has essentially rendered a majority of NFTs worthless, impacting a vast number of digital asset holders.
The researchers point out that this alarming trend should act as a reality check against the often over-hyped NFT market. “The market’s current state reveals pricing that is mostly speculative and overly optimistic, far detached from the actual trading history,” the study notes.
Moreover, the research finds that a significant 79% of all NFT collections remain unsold, leading to a market oversaturated with supply but lacking in demand. Even when considering more established projects, the bulk of these collections currently hold minimal market value. Among the top 8,850 collections by market capitalization, 18% are worth nothing, and 41% have a price range between $5 and $100. Less than 1% exceed a value of $6,000, a stark contrast to the million-dollar transactions seen just a couple of years ago.
Legal action has also entered the picture. Investors in the high-profile Bored Apes collection have filed a lawsuit against Sotheby’s Auction House for its role in the sale of rapidly-depreciating assets. The lawsuit contends that the initial price spike was misleading, and not disclosing the identity of the buyer—a crypto platform now in disrepute—harmed investors.
This lawsuit follows a September 2021 Sotheby’s auction that sold 101 Bored Ape NFTs for $24.4 million, well above the estimated value of $12 to $18 million. Despite this initial success, the floor price for Bored Ape NFTs has now plunged to approximately $50,000 in ether, according to data from CoinGecko.
The current state of the NFT market serves as a cautionary tale, underscoring the need for a more balanced and realistic approach to digital asset investment.
