Syed Rahman considers a report that gives a gloomy assessment of the Non-Fungible Token (NFT) market.
A recent report paints a troubling picture of the NFT market.
The analysis carried out by nftevening.com states that 96% of NFTs are now considered “dead’’ and emphasises their lack of profitability and short lifespan.
The report examined more than 5,000 NFT collections and around five million transactions in an attempt to gauge the current state of the market. It concluded that 96% of NFTs are dead - meaning there is zero trading volume, minimal seven-day sales, and little or no presence on social media platforms.
The report also stated that more than 43% of NFT investors are running at a loss on their purchases, with the average loss being 44.5%. It highlights a contrast in profitability between those NFT collections that have flourished due to astute marketing and strong community engagement and those that have seen massive drops in value.
Significantly, the report also says that the average lifespan of an NFT is now 1.14 years, which is much shorter than more traditional crypto asset investments. This can be viewed as a sign of NFTs’ inability to retain their long-term value – a factor that only adds to the instability of the market. This instability has seen NFT sales falling by more than a third in recent months.
Volatile
At this stage, the future of NFTs is hard to gauge with any certainty. This year has, so far, seen other digital assets performing healthily in the market while NFTs have nosedived.
This report is the latest episode to highlight the volatile nature of the crypto market. It is often driven by popularity which, in turn, damages its chances of being viewed as a reputable place for investment.
This is, in part, why there has been such a passionate call for robust legislation to be put in place to safeguard investors. Stringent regulations on how one is able to promote crypto-related investment projects would prevent the recurrence of ‘pump and dump’ schemes.
It should be emphasised that, for the most part, NFTs were not fraudulent and had genuine and useful technologies behind them. However, horror stories were often heard about those who had lost significant sums of money in NFT projects. The volatility in the market opens the door for opportunistic fraudsters and allows them to use the skyrocketing value as an incentive to persuade people to part with their money. Such activity has played at least some part in NFTs’ current difficulties.
