As cryptocurrencies continue to bleed value, the value should flow into NFTs as a “safe haven.” But, unfortunately, it seems likelier we are amid an NFT market crash. Despite some high-value sales, all crucial metrics have significantly decreased in the past month.
It isn’t too challenging to see why people would think the current status quo is part of a broader NFT market crash. There is no shortage of new projects landing on OpenSea or other marketplaces, but there seems to be little excitement. Some top-tier projects continue to note strong and substantial sales, but that doesn’t mask the overarching downtrend in this industry.
One can analyze the “health” of the NFT market through several crucial metrics:
To avoid an NFT market crash, at least one or two of these metrics should yield positive momentum. Sadly, that is not the case, as all key metrics have been in a downward spiral this past month. Not by a small fraction either, as everything has dwindled by at least 38% and up to 80.7%. That is not a healthy sign for the industry, and it seems the “fear” affecting cryptocurrencies spills over into the NFT segment.
The first sign of an NFT market crash is a decrease in overall buying and selling activity. While it isn’t uncommon to see ebbs and flows on that front, the current downtrend is very outspoken. However, from a monthly viewpoint, nothing is exciting, and no immediate change is expected either. Things can still turn around in the coming weeks, but that seems unlikely due to unfavorable macroeconomic conditions.
Below are a few key trends (data by NonFungible) confirming the current NFT market crash outlook:
All of those trends confirm people are less eager to buy NFTs, let alone spend significant amounts on virtual art. The average sale price of $431 is still fairly high, but that near 50% MoM decline confirms overall interest wanes. Moreover, it has become a lot more challenging for creators to sell their NFTs directly, let alone through secondary sales. The NFT industry is not in a good place right now.
Making things worse is the ongoing decline in user activity. That is measured through the number of active wallets on NFT marketplaces and the number of buyers and sellers. All three metrics have declined strongly this past month. The decline in active wallets is especially worrisome.
The bigger question is whether the momentum can reverse. Pretty big sales across Bored Ape Yacht Club, Don’t Panic, Pudgy Penguins, CryptoPunks, and Otherside continue to make headlines. However, people spending between $500,000 and $1 million are few and far between. Moreover, the NFT industry needs many more collections to succeed long term. Rehashing the same profile picture collections over and over again will grow old, eventually. 
All signs point to an ongoing NFT market crash from a short-term perspective. Zooming out the yearly performance, things do not get any better. It appears NFTs peaked somewhat a year ago and, despite an uptrend earlier in 2022, continue their downtrend.
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