The NFT market has arguably never been more difficult. A new industry report released this week confirmed that the industry is in long-term decline. But what can those involved and behind NFTs do about it? BeInCrypto asked experts for their opinion.
Any way you slice it, the NFT market is struggling right now. Yesterday, August 3, DappRadar released its monthly industry report and confirmed that NFT sales had fallen for the fifth consecutive month.
Five consecutive months of decline for the NFT market
In July, NFT trading volume fell 29% to $632 million compared to June. Total NFT sales also fell 23% to $3.7 million. A previous report from DappRadar that analyzed the second quarter of 2023 showed that NFT trading volume was down 38%.
To underscore the point, Nifty’s, a portal for web3 creators that had branding deals with the likes of Looney Tunes and The Matrix, and was backed by the likes of Mark Cuban, suddenly shut down on August 3.
Much criticism has been leveled at NFTs as a class of crypto assets. First, the most popular and most expensive tokens are based on little more than exclusivity. But the exclusivity and the price are the same. As soon as one collapses, the whole building begins to crumble.
Source: DappRadar
Most “NFT communities” based on profile photo tokens (PFPs) are full of concerns about the market performance of their NFTs. Many holders (those who own the tokens) are understandably concerned about the resale value of something they have often paid many thousands of dollars for.
With the market slowly deflating, the question remains: have they been sold as a utopia? An idea of a digital community with the benefit of a lucrative digital asset.
NFT holders need more utility, experts say
Ashton Addison, the founder and CEO of Crypto Coin Show, a popular crypto media outlet, believes that non-fungible tokens should add real value for their holders. Access to their community, benefits and a cool profile picture is not enough, he told BeInCrypto.
“NFT projects should generate real value for the NFT holders beyond access to their community, perks and a cool profile picture. The speculative side of NFT trading also diminishes when Bitcoin and crypto trading move sideways. With Bitcoin moving sideways in a tight range over the past month, NFT speculators are likely to be afraid to trade NFTs for fear of a BTC and ETH price drop, which would in turn push down the rock bottom prices of the top collections,” Addison stated.
Are you still learning what an NFT is? Look no further: NFTs explained: what are non-fungible tokens and how do they work?
According to Markus Levin, co-founder and CEO of XYO, unique tokens with no practical use were always doomed. Levin told BeInCrypto that for these types of digital assets to succeed, they need to become more than collectibles. He continued:
“Instead, they should demonstrate meaningful applications such as enabling verifiable ownership of real-world assets, streamlining ticketing systems, improving supply chain management, and providing access to exclusive content and experiences. By demonstrating their usefulness and practicality in everyday life, NFTs withstand market fluctuations and solidify their position as valuable tools with widespread adoption potential.”
NFTs are more than investments
But perhaps observers should take a more nuanced look at NFTs in general. While sales and trading volume is one metric, those involved often care about much more.
Thorne Melcher, chief technology officer at a studio called smol farm, and a creator himself, believes we’re in a “trough of disillusionment.”
While there is hope for the technology, Melcher told BeInCrypto. However, the change requires a shift in the perception of them as investments.
“This would align NFTs with the world of physical art and collectibles. Yes, “sometimes” you may be able to flip them for profit, but most people buy physical art and collectibles because they like them, without counting on future profits. In order to revive the NFT market, that kind of collector needs to take center stage, she continued.
While speculative NFT money grabs are likely over and hopefully never to return, said Jeremy Levitan, founder and CEO of Dew Drops. “Establishing a non-tech native audience will be invaluable for long-term scalability,” Levitan said.
A sentiment many of BeInCrypto’s sources agreed with.