Is the NFT Boom Over? Trading Volumes Hit 12-Month Lows

Interest in NFTs has fallen in tandem with the broader cryptocurrency market as trading volumes hit their lowest levels in a year. 

OpenSea NFT Trading Stagnates 

NFTs have not escaped the crypto bear market, trading data shows.

The non-fungible token market is struggling to maintain the parabolic growth it experienced during the bull market of 2021. Data from top NFT trading venues such as OpenSea reveals that trading volumes have fallen off a cliff in recent months, now at their lowest levels since July 2021. 

According to Dune data compiled by PierreYves_Gendron, OpenSea’s trading volume hit a peak of around $5.8 billion in January. However, trading on the platform has steadily declined throughout the first two quarters of the year, sliding to $3.1 billion in May. June saw the most significant drop in the exchange’s history compared to earlier months as trading volumes plummeted 74% to $826 million. Extending the slide, OpenSea has seen $456.9 million so far this month with four full days remaining.  

OpenSea’s daily trading volume reveals a higher resolution decline in activity. After registering $543 million worth of trades on May 1, days after Yuga Labs’ highly-anticipated Otherside drop went live, daily volumes throughout June and July have come in closer to $20 million. The number of unique NFT transactions on OpenSea also reinforces the decline in interest. In May and early June, transactions regularly exceeded 150,000 per day. Now, they haven’t managed to break past 75,000 in over a month. 

While OpenSea has faced strong competition from other newer exchanges, it’s clear that overall trading volumes are still in decline. The recent trading volumes from X2Y2 and LooksRare, the top two exchanges behind OpenSea, are not nearly enough to make up the difference. According to Dune data compiled by cryptuschrist, X2Y2 currently handles about $27 million in daily trading volume, while LooksRare sees around $9 million. Additionally, as both exchanges offer token incentives to traders, it’s been speculated that much of their overall volume comes from wash trades from market manipulators looking to cash in on the tokens (the exchanges reward their most active users).

Top-Tier Collections Hold Strong

Despite the lack of NFT trading activity, the floor prices of established projects have held in recent weeks, and in some cases increased in ETH terms. Dune data compiled by hildobby shows that the NFT avatar originator CryptoPunks has seen a 62% price increase in floor price from 45 ETH to 73 ETH over the past two months, while the entry price to the Bored Ape Yacht Club has ranged between 80 and 90 ETH over the same period. Though both collections continue to trade down from their highs, their ability to hold above six figures in dollar terms points to ongoing interest in the NFT market. 

Elsewhere, several NFT trends have gained traction despite low trading volumes. Ethereum Name Service, a protocol that lets users register human-readable Ethereum domain names as NFTs, saw its trading volume explode in May and June as enthusiasts rushed to secure rare 3-digit and 3-letter ENS domains. Certain generative art collections have also weathered the decline in trading activity. Like the top NFT avatar collections, highly sought-after Art Blocks sets such as Tyler Hobbs’ Fidenza and Dmitri Cherniak’s Ringers have soared in ETH terms over the past two months. 

The relative success of ENS domains and generative art shows that a dedicated community of NFT enthusiasts remains despite the NFT market experiencing a steep decline. The drop in trading activity could be attributed to more casual participants losing interest in cryptocurrencies and NFTs due to the plummeting prices of top cryptocurrencies such as Bitcoin and Ethereum. 

While some NFT collections are still attracting attention through the slump, the overall trend is negative. After a wild run fueled by an explosion of mainstream interest in 2021, the so-called “tourists” have left, with the market now predominantly propped up by crypto diehards. The recent data indicates that the crypto niche has a long way to go before it reclaims the dizzying heights it hit last year. 

Disclosure: At the time of writing, the author of this piece owned ETH, some NFTs, and several other cryptocurrencies.