The nonfungible token (NFT) sector has seen an explosion of interest all throughout 2021 and the month of August witnessed record-breaking trading volumes as one-of-a-kind digital collectibles sold for prices in excess of $1 million dollars on a regular basis.
As is usually the case in the cryptocurrency ecosystem, hot sectors can cool down in the span of mere hours or days and this appears to be the case for the NFT sector.
According to data from Dune Analytics, the total volume of NFTs traded on the top NFT marketplaces has seen a significant decline since Sept. 2 and the sector was especially hard hit by this week’s Bitcoin-led market correction.
This decline in volume is reflected in the data for the top 5 NFT projects traded on OpenSea, where all have all seen a significant decrease. Loot is the one exception, but the project is a relative newcomer and was also involved in a $70,000 airdrop for holders last week.
The floor price for NFTs has also seen a large drop and data from Dune Analytics showing that at their peak, the price floor was 1.02 Ether but has since declined to 0.37 Ether amid the wider market pullback and the temporary declining interest in NFTs.
It is worth noting that this metric can be somewhat misleading as the price floor can be impacted by newer projects being listed on the market and selling for lower prices.
For many of the top projects such as CryptoPunks and EtherRocks, high-priced sales are still occurring and this indicates that the demand for premium projects remains high.
EtherRock 73 purchased for Ξ790 Ether ($2,607,584.60)
10 hrs 50 mins ago (Sep-07-2021 08:03:49 PM +UTC)
— EtherRock Price (@etherrockprice) September 8, 2021
The NFT sector is still in its infancy
It is also important to remember that the NFT sector as a whole is still in its infancy and is just now beginning to work itself into mainstream conversations.
A good example of this momentum can be found in the ongoing auction for 101 Bored Ape NFTs at Sotheby’s, which has already seen one of the rare collectibles sell for a record 600 Ether (ETH) worth $2.25 million at the time of sale. This suggests that demand for premium projects remains high and that NFT prices could recover as the wider crypto market bounces back.
Christie’s is also supporting the continued growth of the NFT sector by hosting an upcoming Art Blocks Curated auction that is scheduled to take place on October 1.
We’re proud to announce the sale of Art Blocks Curated: Sets 1-3, as part of the Post-War to Present auction in New York on 1 October. Bidding for this lot will be conducted live in ETH—a first for any leading auction house. #NFTs #digitalart #onlineauction @artblocks_io pic.twitter.com/jDNK6VviYi
— Christie’s (@ChristiesInc) September 7, 2021
With well-known and established institutions throwing their backing behind the nascent NFT sector, it’s likely that the pace of mainstream adoption could continue and the current pullback is simply part of the usual crypto market cycles.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Ray Schuetz received a Masters Degree in computer science from The University of Texas (Austin). Ray has been working as a full-time blockchain consultant for the past 3 years. In his spare time, Ray enjoys writing for EthereumCryptocurrency.com and other crypto news publications.