After the initial excitement and hype, the Crypto market is facing an unprecedented downturn, resulting in hundreds of thousands – if not millions – of crypto enthusiasts collectively losing billions of dollars. The scenario with the NFT market and NFT enthusiasts is no different either.
Although the NFT market trade volume went through the ceiling in the first quarter of the year, the bearish market trends that deepened in the second quarter have only declined further in subsequent months.
According to the latest data from Dune Analytics, the global NFT trading volume is down 97% after zooming to a record high in January 2022. The pattern hints at a concerning scenario for investors and entrepreneurs that have anything to do with the NFT market.
In January this year, the NFT trading volume reached to record high amounting to $17.2 billion, resulting in investors rushing to invest in startups in the Blockchain space.
However, in September 2022, the scenario changed upside down, which could be understood from the nosedived trading volume. According to Dune Analytics, only $466 million worth of NFTs were traded in September.
Nonfungible tokens (or NFTs) are cryptographic assets stored on a blockchain with unique identification codes and metadata that differentiate them from one another.
They cannot be traded or exchanged like cryptocurrencies. This is different from fungible tokens such as cryptocurrencies which can be traded or exchanged at equivalency.
The severity of the situation in the Crypto market could be understood from the fact that over $2 trillion has gone down the drain, and NFT is a significant part of it.
The global NFT market is experiencing rapid selling as investors shun riskier assets and the global monetary policy becomes more restrictive. Experts believe that investors are less likely to invest in risky assets in the market due to the recent rise in interest rates. NFTs are no exception.
The uncertainty in the leading markets is another reason behind the record decline in the NFTs and Crypto market. For example, the Crypto market of India, which is one of the leading markets for Crypto and NFT, is in doldrum now.
Last week we reported about the nosedived trading volume of India’s Crypto market. India is one of the leading Crypto markets in the world. Crypto enthusiasts are no more willing to take the risk of betting on Crypto at least for the time being.
One of the primary reasons behind the discouraging performance of NFT trading in India is the new taxation policy introduced by the government. The 1% TDS on VDA (Virtual Digital Assets) which includes NFT and Crypto that has come into effect from July 01 has adversely affected the market. The traders, as well as investors, are discouraged by the reduced gain due to the new taxation policy. The uncertainty over the regulation of Crypto and NFT is another factor impacting the market.
The global economic uncertainty, the possibility of the longest recession that could be around the corner and the geopolitical imbalance due to the Ukraine-Russia war are some of the reasons behind people’s decision to maintain the distance from the Crypto market.