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How The NFT Market Shrunk To 3% Its Peak Value

Sam Tongue

NFTs, once hailed as a potential game-changer for the music industry, have faced a dramatic fall from grace. At its peak in August 2021, the NFT market boasted a staggering $17 billion valuation, luring millions of investors. However, a recent study by dappGambl, a community of finance and blockchain experts, analysed 73,257 NFT collections, revealing that a staggering 95% are now effectively worthless, with a market cap of zero Ether (ETH), the second-most-popular cryptocurrency. This once-thriving market has dwindled to a mere $80 million, representing a mere 3% of its peak value.

Even established creators’ NFT collections, originally fetching hundreds of thousands of dollars, have lost their mass appeal. Among these top collections, 18% now have a floor price of zero, while 41% are priced between $5 and $100. A minuscule 1% of these NFTs still command prices above $6,000.

The study’s authors noted that even projects lacking clear use cases, compelling narratives, or genuine artistic value struggle to attract attention and sales in today’s NFT landscape. This signifies a stark contrast to the early hype and enthusiasm surrounding NFTs, which promised significant income potential for musicians and artists.

Furthermore, OpenSea, the leading NFT marketplace, added to the NFT market’s woes by recently announcing that it would make the collection of promised NFT resale royalties optional. This decision was a significant blow, as the ability to earn a 5-10% royalty on future NFT resales had been a major selling point for NFTs, especially for emerging artists hoping to benefit from their growing stature.

In conclusion, NFTs, once considered a revolutionary force in the music industry, now find themselves in a precarious position, with a vast majority of collections rendered nearly worthless. The inflated expectations surrounding NFTs have given way to a harsh reality, prompting a reevaluation of their role in the creative economy.

Why Should YOU Care?

As the Web3 tech boom rolls on, NFTs seem to have become the first major casualty. What was once an exciting opportunity for labels and artists now seems to be extremely risky business. This study not only shows how and why the NFT market has shrunk so much in such a short period of time, but lays out a vision for the future of the NFT market. Understanding why this market crash happened will help your label build out an NFT plan for the future. It may not be as incredibly lucrative as it once was, but there is still a place for tangible NFTs that don’t just rely on market speculation. Creativity and utility seem to be king in this next chapter of the NFT market.