Crypto enthusiasts might remember a time when Non-Fungible Tokens (NFTs) sold like hotcakes, often exchanging hands for millions of dollars. However, a recent study suggests an array of digital collectible assets have fallen dramatically from their peak, with 95% of them now essentially worthless.
The research, conducted by dappGambl, used information from NFT Scan and CoinMarketCap. It revealed that of 73,257 NFT collections assessed, a shocking 69,795 had a market cap of zero ether, inferring these digital assets have zero value. This implies nearly 23 million people are holding onto worthless NFTs.
Researchers remind us of the risks in the NFT market: “Amid stories of digital art pieces selling for millions and overnight success stories, it is easy to overlook the fact that the market is fraught with pitfalls and potential losses.”
NFTs are essentially digital tokens signifying ownership of unique pieces of content on the blockchain, usually the Ethereum network. In 2021 and 2022, the NFT market experienced a surge of activity which led to $2.8 billion in monthly trading volume.
High-profile collections like Bored Apes and CryptoPunks were auctioned off for millions of dollars, gaining the attention of celebrities such as Stephen Curry and Snoop Dogg.
However, the recent analysis indicates that 79% of these NFT collections remain unsold as supply far exceeds demand, causing a slowdown in the market. Although some projects with lower market caps have been excluded, it’s clear that most collections carry little value currently. Among the top 8,850 collections, 18% are worthless and 41% are priced at merely $5-$10.
As the researchers describe, many in the NFT market appear to be investing in speculative and hopeful price strategies, hoping for a surge in NFT interest that may not repeat. This disconnect between the listed prices and actual sales underlines the speculative nature of the NFT market.