After a significant increase in sales of digital art objects in the form of non-fungible NFT tokens last year, the volume of transactions in them this year has fallen for the third month in a row. Experts and market participants started talking about a possible bubble, and some investors have already begun to look for alternative assets for doing business.
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According to data aggregator NonFungible, sales of NFT tokens decreased by 53% last week compared to the previous week. In total, over the specified period, transactions with NFTs were made in the amount of $207 million. It is noted that since the peak of sales, which was recorded on January 31, more than half of buyers and sellers have left the market. As of the end of January, there were 21,296 sellers in the NFT segment, and by the beginning of April their number had dropped to 7210. The situation with buyers is similar: if in January there were 28,207 of them, then by April the number of buyers decreased to 7894.
The first warning signs appeared back in March, when sales in the NFT segment fell to $230 million. However, at that time, experts assumed that the market contraction was due to the outflow of speculators amid the aggravation of the situation in Ukraine. According to the Be(In)Crypto portal, in February, NFT tokens were sold in the world in the amount of $2.92 billion, and in March this value decreased to $2.3 billion.
Although sales in the NFT segment rose to $469 million by the end of March, the decline in volumes accelerated later. At the end of March, the total number of transactions amounted to 5.45 million units, while in February this figure was 6.88 million transactions. The average transaction volume in March amounted to $422, which is 2.5 times less than the record value for this indicator, recorded in August last year. At the same time, in January and February, the average transaction volume was $655 and $429, respectively.
The contraction of the NFT market was influenced by news about the intention of the US Securities Commission to create special transparency and reporting requirements for the NFT market, comparable to those already in place for traditional securities such as stocks and bonds. It is also known that the agency requested transaction data from a number of market participants, including sellers of non-fungible tokens and platforms for their sale.
Another reason for the market contraction may be global instability, against which many investors decided to take profits on the NFT market and move into more liquid cryptocurrency assets. Many analysts and market participants are inclined to believe that the decline in sales and the outflow of investors may be evidence of long-term problems in the segment.
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