The NFT Market Is Still Stagnant, and It Won\'t Recover Until Crypto Traders Feel Rich Again

Popular collections, such as Yuga Lab's Bored Ape Yacht Club, now cost less than they did before NFT mania began three years ago.

The NFT market has taken a beating in 2024.

Once-hot collections, like Yuga Lab’s Bored Ape Yacht Club, now cost less than they did before NFT mania began three years ago.

Even CryptoPunks, the top NFT collection with a market value of about $874 million, appear trapped in a brutal bear market.

But the situation may change if the launch of spot Ethereum exchange-traded funds sparks a market rally later this year, Nicolas Lallement, co-founder of NFT data platform NFT Price Floor, told DL News.

“Capital will probably rotate to bluechip NFTs,” he said.

In the stock market, bluechip refers to the most reliable and valuable companies on the market.

In crypto, traders use the word to describe tokens or NFTs they consider to have established value.

Essentially, Lallement is talking about a return to the market conditions that fueled the first NFT bull run.

Demand for NFTs skyrocketed in late 2021 after Bitcoin surged some 1,140% the year before.

With vast amounts of newly created capital sloshing around, many who made money quickly piled into NFTs to flaunt their wealth.

“In the end, NFTs act as status symbols,” Lallement said.

Market dilution

There’s no guarantee that money from a market-wide rally will flow into NFTs specifically, let alone those that were previously popular.

“We now have NFTs on Bitcoin, Solana and Ethereum L2s, so the market is not concentrated just in Ethereum as it used to be,” Lallement said.

It’s not just newer NFTs that are diluting the market, either.

“Everyone is currently busy with memecoins and DeFi, especially now that celebrities are also partaking in this,” Mahan Fathi, CEO of NFT analytics site NFT Valuations, told DL News, adding that he doesn’t see a lot of liquidity flowing into NFTs.

Many traders have since moved on from NFTs as vehicles for speculative trading.

The low liquidity of NFTs makes them extremely volatile, creating conditions for huge gains — or total losses.

Memecoins, cryptocurrencies with little use that trade solely on their popularity, have supplanted NFTs as assets of choice for traders looking to make high-risk bets.

Memecoins based on presidential candidates, celebrities, and even comic artist Matt Furie’s Pepe the Frog character have gripped the market in recent months.

Pockets of activity

Despite the overall bearish sentiment for NFTs, there are still some high-end collectors allocating, Fathi said.

In February, a full set of Autoglyphs NFTs sold for $14.5 million. Autoglyphs are among the first generative art NFTs created on the Ethereum network.

Then in April, a rare alien CryptoPunk sold for $12.5 million. Alien Punks are highly coveted because only nine out of the 10,000 strong collection feature that trait.

Still, these sales are dwarfed by those from the previous NFT bull market. In February 2022, another alien CryptoPunk sold for a record-breaking $24 million.

There’s also the question of whether these sales have any bearing on the wider demand for NFTs.

Lallement says they do.

“I expect a trickle-down effect from these high-end NFTs to more affordable ones at some point,” he said.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out to him with tips at tim@dlnews.com.

News source：https://www.kdj.com/cryptocurrencies-news/articles/nft-market-stagnant-recover-crypto-traders-feel-rich.html

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