Oversupplied NFT Market Sees Interest and Sales Plunge

According to NFTs marketplace tracker Nonfungible.com, there is a noticeable drop in sales over the past 10 days. The number of sales fell from 179,004 on March 27 to 156,055 on April 5. In US dollar terms, there is a 6.9% drop in this same period, from USD 223.5m to 208.2m.

Other data in the 10-day period shows the following drops:

active market wallets: -4.45% (49,432 to 47,232)

unique buyers: -5.64% (39,158 to 36,952)

unique sellers: -5.14% (20,601 to 19,542)

primary sales: -4.37% (97,008 to 92,766) and -3.5% in USD terms (USD 64.5m to USD 62.2m)

secondary sales: -22.8% (81,996 to 63,289) and -8.2% in USD terms (USD 159m to USD 145.9m).

Per this data, secondary sales suffered the strongest hit.

Looking at the 30-day data, we see 156,050 sales with USD 208.25m in total and USD 62.22 in primary sales. NBA Top Shot saw a nearly 75% decline in sales over the past month, according to evaluate.market.

“Theres less volume on the [USD] 500 - [USD] 2000 moments than there was in Jan, which is crazy, considering the user base is probably 5-10x,” argued one TopShot user. “Gives you an idea of the type of ”collector“ currently on the site.”

Also, per Bloomberg data, average prices for NFTs fell some 67.5% from a peak in February of USD 4,300 to about USD 1,400.

Another notable aspect of this downturn is what some have described as its 'silence,' given that most people were not aware a crash is happening. Commenters like crypto engineer 'tuba' are arguing that, once sellers realize that there are no more buyers for their NFTs, they may adjust prices -80% overnight, and “it may take them weeks/months to realize this, so the markets are much less reactive.”

Meanwhile, looking at the Google trends data, the searches for 'NFT' saw a massive jump in February this year, reaching its peak in March. It has since been on a decline.

“With NFTs, the risk of oversupply is especially acute, because there is no one in charge, and the barriers to issuance are so extraordinarily low — you can literally create a new NFT in a matter of minutes,” wrote author James Surowiecki. “And, unlike comic books or baseball cards, NFTs dont fall apart or get discarded. In other words, the only thing we really know about NFTs is that there will be more of them a month from now than there are today.” Still, those few “truly rare or inherently appealing” items may hold their value, he added.

But when it comes to the arguments that NFTs are a bubble, Chris Wilmer, a University of Pittsburgh academic who co-edits a blockchain research journal, is quoted by Bloomberg as saying that it's “not meaningful to characterize a concept as a financial bubble. [...] NFTs' aren't in a bubble any more than 'cryptocurrency' is a bubble. There will be manias and irrational exuberance, but cryptocurrency is clearly here to stay with us for the long term and NFTs probably are too.”

In the meantime, many NFT-related tokens are now correcting their strong gains this year.

Top 10 NFT coins by market capitalization: