It turns out cryptocurrency’s blockchain brethren, NFTs, aren’t doing so hot either.
The highly volatile speculative investments that tokenize digital assets on the blockchain are feeling the crypto winter effects. Trading volume on the largest NFT marketplace, OpenSea, has dropped a whopping 99 percent in the four months between May and August 2022, according to data from the decentralized app store DappRadar and reported by Fortune.
The plummeting popularity in the NFT market is even more stark when you look at the financial numbers. OpenSea saw around $2.7 billion in transactions on May 1. On Aug. 28, the platform saw just over $9.3 million in transactions.
Celebrities and brands, however, continue to promote NFT projects in hopes of lining their digital pockets.
In fact, celebrities hawking NFTs without proper disclosure has become so rampant that the consumer watchdog nonprofit Truth in Advertising sent warning letters to a number of celebrities, such as Justin Bieber and Reese Witherspoon, concerning their deception.
At the MTV VMAs this past Sunday, on that same Aug. 28, Eminem and Snoop Dogg took to the stage and, as they performed, were transformed into 3D models of their respective Bored Ape Yacht Club NFTs. The Bored Ape aspect of the performance left many viewers asking…why?!
But, if you’re familiar with either artist, you’d know about their forays into the NFT space over the past few years. Snoop Dogg in particular has gone all in on non-fungible tokens, having made $44 million just earlier this year from selling NFTs of his latest album.
Earlier this year was a much different time for NFTs though. Today, the value of Bored Ape Yacht Club NFTs, easily the most popular of the NFT projects, has plummeted as well. At its peak on April 30, the floor price for a Bored Ape NFT was 154 ether, the cryptocurrency traded on the Ethereum network, but as of Sept. 2, the floor price was around 75 ether, meaning more than a 50 percent drop in value. It should also be noted that the value of ether has dropped as well, from about $2,800 in April to $1,500 in September. So the Bored Apes have taken quite the hit.
And the downturn isn’t only found on OpenSea either. Other NFT marketplaces are feeling it too. Coinbase, the largest crypto exchange in the U.S., launched its own NFT marketplace in May. It has failed to gain any real traction, often recording just around a low five-figures in sales per day. Video game retailer Gamestop also launched its own NFT marketplace in July and has seen roughly the same activity…or lack thereof.
Some brands are reading the room though. Most notably, the studio behind the hugely popular video game Minecraft announced it would not get involved with NFTs.
But still, brand infatuation with NFTs continues. Starbucks is looking to launch a loyalty program using NFTs, luxury brands like Gucci and Tiffany are getting in on the non-fungible token action, and even M&M’s are releasing a Bored Apes version of its candy.
Cryptocurrency has faced downturns before and has mounted comebacks. But, the much newer NFT phenomenon is facing an even bigger challenge: Brands believe in it, but consumers don’t. That’s a big problem to overcome.