Some major institutions are still betting heavily on NFTs despite the decline in value. Over the past two years, the cryptocurrency market has been a rollercoaster, marked by peaks and valleys, with the Non-Fungible Tokens (NFTs) sector significantly affected.
NFT market is facing challenges
The NFT market, which once witnessed a euphoric bull run in 2021 and 2022 with a monthly trading volume of almost $3 billion in August 2021, saw a stark transformation in fortunes. Recent data from The Block revealed a weekly traded value of approximately $80 million in July 2023, representing just 3% of its peak value in August 2021.
Notably, a recent study from crypto analytics firm dappGambl, which examined over 73,000 NFT collections, found that 95% of these collections had a market cap of zero Ether (ETH).
“Having looked at these numbers, we estimate that 95% includes more than 23 million people whose investments are now worthless,” the firm wrote.
One of the key findings from the study was that 79% of all NFT collections remained unsold, creating an oversupply in the market. This surplus led to a buyers’ market, with reduced demand unable to revive enthusiasm among collectors and investors.
The NFT Spring: A Bold Prediction
Despite the challenges facing the NFT market, some experts see a glimmer of hope. On Friday, prominent crypto analyst Krypto Kaleo expressed hope that the NFT market was nearing its bottom. Drawing parallels to previous crypto trends, he predicted that 2021 and 2022 would be akin to a “test pump,” similar to what the altcoin market experienced during the 2017 ICO craze.
Kaleo’s outlook suggested that the NFT market could see a revival in 2024 and 2025 after a period of consolidation and recalibration.
“Right now, everyone thinks NFTs are dead, and more people than not seem to believe they’ll never come back. I look forward to the market proving them wrong again.” Kaleo tweeted.
PayPal’s NFT foray
That said, amid waning interest in NFTs, institutional players, known for their tendency to invest when others are cautious, appear to be venturing into the NFT sector. This week, PayPal submitted four patent applications related to NFTs, Layer 2 (L2) solutions and metaverse technology, together with companies such as SONY, Formula One, Fidelity Investments and Japanese electronics giant Fujitsu.
These patent filings specifically underscore these institutions’ commitment to delving into the NFT realm, signaling a potential NFT revival ahead.