Bitcoin Slump Impacts NFT Market Q2 Witnesses Significant Decrease in Sales Volume
The digital collectible market faced a substantial decline in the second quarter of 2024, as sales reached their lowest point since late last year. According to data from CryptoSlam, trading volume for non-fungible tokens (NFTs) plummeted by 45% in Q2, falling to $2.24 billion. This decline followed an initial surge from $2.9 billion in Q4 2023 to $4.1 billion in Q1 2024.
As Bitcoin struggles at a high level, the NFT market is under immense pressure. NFTs are considered risky assets, and when liquidity diminishes, prices tend to plummet.
Several factors could contribute to this downturn, including consumers purchasing NFTs at discounted rates, a growing shift of interest towards Bitcoin and Ethereum ETFs, the prevalence of wash trading practices, and oversaturation of the NFT market.
Despite this ongoing downward trend, certain NFT collections managed to achieve substantial profits. With a plethora of NFTs available, there are undoubtedly some lucrative deals to be found.
CryptoPunks, one of the earliest and most influential NFT projects, staged an impressive comeback. It became the top-selling NFT collection during the week ending June 22, with a 155% surge in sales volume, reaching $5.26 million.
DMarket from Mythos experienced a slight decline of 9.21% in sales but still achieved over $4 million. Bored Ape Yacht Club (BAYC), an Ethereum-based project, secured third place with nearly $3.5 million in sales, marking a 73.66% increase from the previous week.
Solana-based NFTs set a new record with $5 billion in all-time sales volume in February, while Bitcoin-based NFTs climbed the ranks, recording $4.27 billion in sales by June.
Additionally, one notable event of the quarter involved billionaire Mark Cuban, whose crypto wallet linked to the Ethereum Name Service (ENS) domain “markcuban.eth” became active after nearly two years of dormancy.
Cuban reportedly sold various high-profile NFTs, including EulerBeats Genesis and Pudgy Penguins. Within just two days, Cuban’s wallet sold 14 NFTs worth approximately $38,533, with the highest-priced item being Pudgy Penguin #6239, which sold for $30,578.
The decline in NFT trading volume reflects the broader negative outlook for the cryptocurrency market. Analysts predict that Bitcoin could drop to $50,000, partly influenced by macroeconomic factors such as the upcoming U.S. elections and changes in the Consumer Price Index (CPI).
Apart from macro factors, recent transfers from large Bitcoin holders, including Mt. Gox and the U.S. government, could exacerbate the bearish momentum.
According to a Monday announcement, Mt. Gox will begin repaying its customers in July, with estimated repayments totaling over $9 billion in cash, Bitcoin, and Bitcoin cash. This could increase selling pressure across the markets.
The German government’s recent transfer of 900 BTC, with 400 BTC moved to Coinbase and Kraken, and the alleged transfer of nearly 4,000 BTC to Coinbase by the U.S. government, also adds to the overall market sentiment of fear and uncertainty.
Bitcoin is currently trading at around $61,000, down 1.3% in the last 24 hours, according to CoinGecko. The Bitcoin greed and fear index is currently at “fear.”
Bitcoin’s struggle to reclaim its key resistance level has raised concerns among investors and market analysts about the long-term viability of the NFT market.
However, the drop in sales does not imply that NFTs are disappearing. Instead, it highlights the increasing popularity of affordable NFT sales, making the space more accessible to a wider audience that may prefer starting with lower-cost options.
The NFT market experienced a significant downturn last month, with sales volumes dropping across major blockchains like Bitcoin, Ethereum, and Solana. While July may show improvement, it is wise to exercise caution with all digital assets.
In May, the NFT market recorded a total sales volume of $0.63 billion, marking a 41% decrease from April. Sales volumes across major blockchains also notably declined, with Bitcoin experiencing a steep drop from $602 million to $194 million in May, a decrease of 68%.
Advertise Here
