While today marks International Non-Fungible Token (NFT) Day, the overall market continues its bearish trend, offering little reason for celebration. A new study by dappGambl has shown that an overwhelming 95% of NFT collections are dead, standing at a market cap of zero Ether.
Table of Contents
From hero to zero
Not long ago, NFTs underwent significant evolution, transitioning from a tight-knit community to dominating the spotlight in 2021. Promoted by the elite and celebrities, they integrated into mainstream culture, becoming emblems of prestige.
Yet, the current atmosphere for NFTs seems grim, demonstrated by a 114% surge in “Are NFTs Dead” searches within the past 12 months.
Bleak findings from the study
The dappGambl study dissected over 73,000 NFTs on NFTScan, bolstered by a review of the top 8,000 NFTs on CoinMarketCap. Through thorough analysis, dappGambl determined how many NFTs had no market capitalization and no minimum price, exposing the depth of dormant NFTs and untouched collections.
Distressingly, out of 73,257 NFT collections analyzed by NFTScan, 69,795 were valued at zero Ether. This translates to a staggering 95% of NFTs essentially being valueless. Further adding to the grim scenario, only 21% of these collections sold out, which means an immense 79% of collections remain unsold.
Top collections show overblown valuations
But what about the NFT elite? dappGambl shifted focus to the 8,850 premium collections on CoinMarketCap. Alarmingly, even within this cream layer, 18% were found to have no minimum price. This suggests that even the crème de la crème of NFTs is grappling with waning demand.
Moreover, a majority of NFTs are pegged between $5 and $100, making up 41% of the entire market. Astonishingly, a meager number (less than 1%) command prices beyond $6,000.
But there’s another angle to this story. The actual count of dormant NFTs might be higher than projected. This stems from the reality that numerous NFTs, despite their million-dollar tags, have sales under $20. This glaring mismatch between listing prices and actual trades reflects overblown valuations that fail to mirror real-world interest or concrete sales.
A positive sidenote
However, all is not lost. Experts, while recognizing the challenges, remain optimistic. Vlad Hategan of dappGambl voiced his perspective on NFTs’ evolution, underscoring the urgency for authentic applications:
“The staggering 79% of all NFT collections lying unsold and 95% of NFTs with a zero Ethereum market cap paints a daunting picture. But the way forward? Potential buyers and investors are now rallying behind NFTs with palpable use cases, robust narratives, or genuine artistic merit,”
Indeed, the industry is now gravitating towards NFTs that hold genuine utility or cultural value. Be it NFTs that immortalize cultural artifacts, enhance gaming experiences, or even foray into real estate. These NFTs represent the tangible value that starkly differs from the prevalent NFT landscape.
This new status quo emphasizes the need for NFTs to advance beyond mere collectibles and incorporate genuine applications to weather market slumps. The bear market tends to have a cleansing effect by weeding out bad projects. As business magnate Warren Buffet once said:
“Only when the tide goes out do you discover who’s been swimming naked.”