Are NFTs Losing Their Shine? Study Reveals Over 95% of Collections Worthless

In recent years, Non-Fungible Tokens (NFTs) have captured the imagination of the digital world with stories of multimillion-dollar art sales and celebrity endorsements. However, a recent study has cast a shadow over the NFT market, revealing that most NFT collections hold little to no value. This article delves into the findings of the study conducted by dappGambl, exploring the implications and the current state of the NFT market.

The NFT Boom: A Recap

Before delving into the study’s findings, let’s revisit the NFT boom that took place in 2021 and 2022. During this period, the NFT market experienced exponential growth, with monthly trading volumes reaching a staggering $2.8 billion. Popular NFT collections like Bored Apes and CryptoPunks fetched millions of dollars, and even celebrities like Stephen Curry and Snoop Dogg joined the NFT frenzy. The market euphoria coincided with the peak of cryptocurrency prices, particularly Bitcoin, which reached nearly $70,000.

The DappGambl Study: A Reality Check

A chart showing the number of NFTs per floor price.

(Source: dappGambl)

The dappGambl study, which analyzed data from NFT Scan and CoinMarketCap, paints a sobering picture of the current NFT landscape. The most startling revelation is that over 95% of the 73,257 NFT collections examined have a market cap of zero ether, rendering them essentially worthless in terms of market value. This implies that nearly 23 Mn individuals hold NFT assets that hold no tangible financial value.

One of the key takeaways from the study is the prevalence of unsold NFT collections. According to the data, a staggering 79% of all NFT collections remain unsold. This oversupply of NFTs has resulted in a buyer’s market where demand struggles to keep up with the abundance of offerings. The consequences of this surplus are reflected in the depressed values of many NFT collections.

Top Collections: A Mixed Bag of Value

Even when focusing on the top 8,850 NFT collections by market capitalization, the study reveals a mixed landscape. Approximately 18% of these collections are essentially worthless, offering no real value to collectors. A significant portion of collections, approximately 41%, is priced in the range of $5 to $100, indicating that their market value remains modest. Fewer than 1% of these top collections carry a price tag above $6,000, a far cry from the million-dollar deals that were commonplace just two years ago.

Speculative Pricing and Hopeful Valuations

One of the underlying reasons behind the inflated NFT valuations, as indicated by the researchers, is speculative pricing and hopeful expectations of another market surge similar to the one witnessed in 2021. The study highlights a disconnect between listed prices and actual sales, suggesting that many sellers are waiting for another NFT frenzy that may never materialize. This speculative behaviour could further contribute to the volatility and uncertainty surrounding NFT prices.

Conclusion: Navigating the NFT Landscape

The dappGambl study serves as a reality check for the NFT market, highlighting the challenges and uncertainties that have emerged amidst the initial exuberance. While it’s clear that a significant portion of the NFT market is characterized by speculative pricing and unsold collections, it’s essential to recognize that the NFT space is evolving. The market may find its footing as it matures and as new, innovative use cases emerge.

Collectors, investors, and enthusiasts must navigate this landscape with prudence, understanding that not all NFTs are destined for million-dollar sales. As the market undergoes corrections and transformations, it’s the NFTs that offer real utility, longevity, and community engagement that may ultimately stand the test of time. Whether NFTs are in a temporary downturn or facing more profound challenges remains to be seen, but one thing is certain: the NFT market is far from static, and its evolution is worth monitoring closely.

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