Bitcoin and Ether price crash that saw BTC falling by over 50% while ETH fell below $2,000 during the horrific dip in May are perhaps not the biggest casualties of May’s crypto market storm. Reports are now out showing that NFT transactions fell roughly a whopping 90% during the May market correction. NFT naysayers are even predicting more woes for the non-fungible token market, hinging their hard-line stance that NFTs are nothing but make beliefs and have never had any actual use case.
According to a recent report from Protos, NFT peak transactions at $102 million as of May 3rd (highest ever record NFT transaction for a single day) and a cumulative $170 million for the week has now fallen to a paltry $19.4 million in NFT sales as recorded for last week.
While this may be a lucid confirmation that the NFT critics may be right, after all, NFT proponents dismiss the horrific drop in NFT sales as one of those cycles typical of the cryptocurrency market. Andrew Miller, Head of Product Marketing at Oasis Labs, while commenting on the subject matter to Finance Magnates, said
“Current use cases of NFTs are limited to assets such as digital art, where buyers speculate on the piece’s potential value when marking their purchase. [...] This speculation is largely predicated on a belief that they will have social and historical value.”
Miller, however, believes that over time, the NFT market will take root just like its traditional crypto counterpart has become established.
“As the technology surrounding NFTs matures, we expect to see them represent assets that are more sophisticated and have higher intrinsic value,” Miller said.
Asides from the NFT market transactions plummeting, at the peak of the NFT craze, the DeFi subsector came in crossfires with strong proponents of climate change where the latter criticised the NFT industry as bad for the environment. They criticised NFT transactions as spiking the carbon footprints of the overall blockchain sector, a debate that has already been a heated topic, especially with Bitcoin energy consumption under scrutiny of late. However, that is usually not the case as most other blockchains which are starting to support NFT minting are not modelled on the proof-of-work; an energy-hungry consensus algorithm on which Bitcoin and currently Ethereum (currently the main blockchain for NFT token minting) run on.
Despite ongoing debate as to the increasing carbon footprints of NFT-based transactions, investors were seen pumping in their dollars into the sector. Last month, a news report by Crunchbase showed that OpenSea, the largest NFT marketplace raised $23 million in a round led by Andreessen Horowitz while Rarible, another NFT marketplace raised $1.8 million in funding.
Even other dominant exchanges like Binance waded into the NFT market by launching their own in-house NFT marketplace exposing its over 7 million global users to NFTs. WariziX, an Indian crypto exchange also announced the launch of its own NFT marketplace recently even while NFT popularity has been dwindling.