Despite the decline in value, several major institutions continue to place substantial bets on NFTs. In the last couple of years, the cryptocurrency market has been a tumultuous ride, characterized by dramatic highs and lows, and the Non-Fungible Tokens (NFTs) sector has not been immune to these fluctuations.
Challenges Confronting the NFT Market
The NFT market, once in the throes of a euphoric bull run throughout 2021 and 2022, with August 2021 recording nearly $3 billion in monthly trading volume, has undergone a stark reversal of fortune. Recent data from The Block indicates a weekly trading value of approximately $80 million in July 2023, representing a mere 3% of its peak value in August 2021.
Notably, a recent study conducted by the crypto analysis firm dappGambl, which examined over 73,000 NFT collections, revealed that 95% of these collections had a market cap of zero Ether (ETH).
A significant finding from the study is that a substantial 79% of all NFT collections remained unsold, resulting in an oversupply in the market. This surplus has contributed to a buyer’s market, where diminished demand has failed to rekindle excitement among collectors and investors.
The NFT Renaissance: A Confident Forecast
Despite the obstacles confronting the NFT market, a ray of optimism emerges. On a recent Friday, well-known crypto analyst Krypto Kaleo articulated his belief that the NFT market might be nearing its lowest point. Drawing parallels with prior cryptocurrency trends, he likened 2021 and 2022 to a “test pump,” reminiscent of the altcoin market’s experience during the ICO frenzy of 2017. Kaleo shared his perspective on Twitter, stating, “Currently, everyone thinks NFTs are dead, and more people than not seem to believe they’re never coming back. I’m looking forward to the market once again proving them wrong.”
PayPal’s NFT Foray
However, in the midst of declining enthusiasm for NFTs, institutional entities known for their proclivity to invest when others exercise caution appear to be exploring the NFT sector. Just this week, PayPal submitted four patent applications related to NFTs, Layer 2 (L2) solutions, and metaverse technology, joining the ranks of companies like SONY, Formula One, Fidelity Investments, and Japanese electronics giant Fujitsu.
Significantly, these patent filings underscore the dedication of these institutions to venture into the NFT domain, hinting at a possible resurgence of interest in NFTs on the horizon.