The NFT market is in the middle of a serious slump. Few projects are making profits and seeing turnover. Floor prices are down on all kinds of collections. The well-known collections and the smaller, lesser-known collections all suffer. Is this just a negative dip and will NFTs recover in the next bull run? Or is this a trend?
So, let’s dive a bit deeper into the current state of the NFT market. The following chart, shows the decline of major NFT floor prices.
Source: Twitter
A Crypto Industry Overview of July 2023
Before we get into NFTs, let’s take a look at the crypto industry overview for July 2023. That puts everything a bit more in perspective as well. Data in this article come from a DappRadar report over July.
If we look at the UAW (Unique Active Wallets), we see a decrease of 13% in July. This leads to 1.7 million daily UAW (dUAW). There’s one massive contributor to this drop. That’s the regulator uncertainty in the US. With summer recess, we have two important factors combined:
- Blockchain gaming is coming back: It only saw a 0.5% decrease in dUAW. It now has reached a 41% dominance. On the other hand, DeFi kept suffering. It saw a surge in June, but July was not as good. The UAW went down with 26% or 510,654 dUAW. However, that’s still 30% of the crypto industry’s total user activity.
- When looking at the social Dapp sector, dUAW decreased by 2%. However, its dominance remains stable at 15%. This is a sector to keep an eye out on. Decentralized social media may start playing a more prominent role in this sector.
Diving into blockchains, we see the BNB chain emerge as the leader in July. They had a dUAW of 546,779 combined with a 21% industry dominance. PancakeSwap is still the undisputed leader within the BNB chain. 27% of all activity happened on this Dapp. WAX with Alien Worlds and Polygon with Stargate Finance also remain at the forefront. That’s despite a minor decrease in numbers.
The biggest slump in numbers was at Ethereum and Arbitrum. Ethereum’s dUAW slumped to 29.8%. This is largely due to a weakened NFT market. So, let’s take a look at the NFT market.
The July 2023 NFT Market
NFTs slumped to a 4% share of the crypto industry activity. The dUAW stood at 70,338, which is a 19% decrease. The NFT market went from bad to worse in July. Trading volume during the first week stood at around $182 million. However, during the fourth week, that figure crumbled to $57.5 million. That’s no less than a 68% decrease within 3 weeks.
Compared to June 2023, the trading volume also took a hit. It went down by 29%, totaling $632 million. In the meantime, sales also declined by 49%. They went from 727,413 to 368,331. Lynn Anderson’s song ‘I never promised you a rose garden’ could have been written for NFTs. However, the average transaction price also lowered. This results in ‘only’ a 23% monthly perspective.
What we do observe, is a change to ‘low barrier entry’ NFTs. They become more popular. Their individual value is smaller. Hence, they attract a wider audience. So, the dynamic NFT market can cater to this change. Decreasing trading volume doesn’t mean that interest in NFTs is down the drain.
The general interest can shift to other crypto spaces. For example, to DeFi. If DeFi flourishes, NFTs tend to suffer. That seems to work the same for the other way around. There is, however, one chain that stood out. That’s Polygon. They were dominating the sales count with 772,424 traders or 27%.
So, in general, we see a downtrend. Nonetheless, some areas still do well, like generative art. To recap this NFT section, it’s not all as bad as it may look. DappRadar doesn’t see this as stagnation or retreat. They rather see the NFT market mature and recalibrate. New areas show up and there’s a wider, more diverse audience.
Conclusion
During July 2023, the NFT market slumped to low trading volume levels. However, there’s still interest in NFTs. This slump doesn’t seem to be an emerging trend. It rather appears that the NFT market is maturing and refocusing. Furthermore, the whole crypto market suffered during July. This also puts the decrease in NFT activity a bit more in perspective. Here is part 2.
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