The nonfungible-token (NFT) market, already facing challenges, is experiencing a notable decline as enthusiasm wanes for a recently launched lending and trading platform. The popular collections CryptoPunks and Bored Ape Yacht Club are both witnessing significant drops in sales volume and prices. At the core of this downturn lies Blur, a token that initially gained traction by offering enticing incentives. However, its subsequent decline had a cascading effect on the NFT market, leading to decreased demand for underlying NFT collections. As the broader crypto market rallied, Blur’s token price dropped, causing a ripple effect on liquidity and trading volume in the NFT space.
NFT Market Sees a Significant Downturn: Recent data reveals a substantial decline in the NFT market’s performance. Sales volume for CryptoPunks has plunged by 50% in the last 30 days, while the Bored Ape Yacht Club experienced a 42% decrease in sales volume during the same period. Additionally, the average sales price of a Bored Ape NFT is down by 20%. The total market cap of NFTs has shrunk by 6%, with the total volume witnessing a 40% drop over the past month. Moreover, the number of NFT traders has decreased by approximately 16% to 132,233 in the same timeframe.
Blur Token’s Role in the Market Decline: Blur played a pivotal role in the decline of the NFT market. Initially, the token attracted traders and users to the Blur marketplace by offering zero fees and tokens as incentives. However, after a surge in its price following its February release, the token’s value gradually declined before accelerating its slide. As Blur’s price plummeted, the demand for NFTs associated with the token also diminished, leading to a crash in the floor prices of many NFT collections. According to Nicolas Lallement, co-founder and COO of NFT Price Floor, this market correction was long overdue.
Liquidity Crisis in the NFT Market: The recent downturn in the NFT market has been exacerbated by a liquidity crisis. Trading volume in Ether for Blur is now approximately 96% lower than it was at the end of June. NFT trading volume, as a whole, dropped by around 68% to roughly $57.5 million in the week of July 24 compared to three weeks earlier. Sara Gherghelas, a researcher at DappRadar, attributed part of this decline to the increasing popularity of lower-priced NFTs. However, Martin Lee of researcher Nansen highlighted that liquidity is drying up, indicating a more profound issue.
Market Analysts’ Surprise: The recent drop in the NFT market comes as a surprise to many analysts who believed the market had already hit its bottom. In the second quarter, NFT trading volume experienced a 38% decline, totaling $2.9 billion. During this period, CryptoPunks’ trading volume also decreased by 47%. The unexpected nature of this downturn underscores the volatility and unpredictability of the NFT market.
The NFT market is currently facing significant challenges, with sales volume, trading volume, and prices witnessing sharp declines. Blur, the token that once attracted traders and users to the Blur marketplace, now stands at the center of this downturn. As liquidity dwindles and the broader crypto market rallies, the NFT market’s future remains uncertain. Market participants and analysts are closely monitoring the developments to ascertain the extent of this downturn and potential recovery in the future.
