Nonfungible tokens (NFTs) took center stage in the year 2021 as artists, influencers, A-list celebrities and the sports industry finally came across a fan engagement tool that empowered the general public to cash in on their success. However, the hype around NFT did not manage to stand its ground, as sales plummeted to one-year lows amid the ruthless bear market of 2022.
The NFT boom, which started in early 2021, upheld its glory until May 2022 — supported by a healthy and bullish crypto ecosystem and positive investor sentiment. However, Bitcoin’s (BTC) struggle to hold on to its all-time high prices had an adverse impact across the crypto ecosystem.
The NFT ecosystem recorded its worst performance of the year in June 2022 as the total number of daily sales fell down to roughly 19,000 with an estimated value of $13.8 million — a number which was recorded back in June 2021.
Last year, however, daily NFT sales of a similar amount were considered impressive as the nascent ecosystem saw mainstream implementations across various use cases.
As evidenced by data from nonfungible.com, the NFT ecosystem witnessed its highest number of daily sales of 224,768 NFTs on Sept. 24, 2021, worth $78.3 million. However, the biggest sale in terms of dollar value took place on May 1, 2022, when 118,577 NFTs were sold in a day for $780.4 million.
Some of the key factors negatively impacting the hype around NFTs are falling Ether (ETH) prices, a lack of secondary market demand and unrealistic gas fees. As a result, over the last three months, the NFT market capitalization suffered a drop of nearly 40% while losing over 66% of its trading volume, as shown by data from NFTGo.
Amid the bear market, crypto entrepreneurs, including Changpeng “CZ” Zhao, are helping governments explore NFT use cases in ID-ing citizens. Social media giant Meta’s Facebook, too, recently announced plans to support NFTs for creators.
A Meta spokesperson revealed that the rollout of NFTs on Facebook would be gradual, beginning with select creators in the United States.