Nonfungible tokens (NFTs) took the world by storm in March and April of this year with an onslaught of daily headlines about record-breaking sales and big-name companies dropping their own one-of-a-kind digital art pieces dominating the mainstream media.
Fast forward a few months and the narrative has shifted to the ‘NFT bubble’ popping and doom and gloomers warning that NFT investors are on the verge of losing all of their money.
The rapidly declining prices and activity on the top NFT marketplaces have prompted many to speculate on the death of the nonfungible token space despite the well-known cyclical nature of the crypto market that can spring back to life at the drop of a hat.
You knew this was coming, right?
NFTs Are Dead
— Jonathan Mann (@songadaymann) June 4, 2021
Active users jump ship
Active users are the lifeblood of NFT marketplaces, but the choppy nature of the cryptocurrency markets over the past two months, including the May 19 sell-off which saw $1.2 trillion in value wiped from the crypto market cap has led to a precipitous decline in user activity.
As seen in the chart above, the active wallets on NFT marketplaces peaked near the end of March and has since fallen by more than 40% as declining values combined with high transaction fees on the Ethereum (ETH) network kept traders out of the market.
The decline in active wallets coincided with a decline in sales across the space as rapidly falling token prices exacerbated the losses of holders and collectors who saw their valuable art pieces lose up to 90% of their value overnight.
The decline in active users has resulted in a 60% decrease in total daily sales which fell from a high of $325 million on May 7 to its current figure at $110…