Analysts from NFT Evening project that 96% of 5,000 NFT collections are defunct in 2024.
The analysis sheds light on the current status of the non-fungible token market and its challenges in 2024. Experts indicate that 96% of over 5,000 existing NFT collections are considered “dead.” This classification implies that these collections have experienced zero trading volume, no sales for over a week, and no activity on the X social media platform.
Analysts highlight that 40% of NFT owners currently find it challenging to turn a profit from their tokens. Moreover, the average lifespan of NFT collections stands at 1.14 years, which is 2.5 times shorter than that of traditional cryptocurrency projects.
Additionally, 2023 marked a record year for the decline of NFT projects, with nearly 30% falling into the “dead” category. Experts report that 44.5% of NFT owners are currently facing losses.
The team at NFT Evening has also pinpointed the most successful NFT collection to date, which is the Azuki project. This collection has, on average, multiplied investments by 2.3 times for its token holders.
“This achievement can be attributed to the robust community involvement, distinct artistic vision, and savvy marketing strategies.”
Furthermore, analysts pointed out the least profitable collection—Pudgy Penguins, which has witnessed a staggering 97% decline in value, making it the worst performer in terms of owner returns.
Experts have emphasized the downturn in the non-fungible token market, urging investors to proceed with caution. They also suggest that NFT creators reevaluate their project execution strategies.
End of an Era
NFTs from well-known collections purchased during the hype of 2022 are currently being sold at immense losses.
For instance, Arkham Intelligence reported that NFTs acquired by pop icon Justin Bieber in 2022, valued at around $2 million, are now appraised at just over $100,000, marking a staggering 94.7% loss.
The musician’s wallet initially saw an inflow of $2.34 million in Ethereum (ETH), with $1.86 million allocated for acquiring two Bored Ape Yacht Club (BAYC) NFTs and a couple of Mutant Ape Yacht Club (MAYC) NFTs. The portfolio also contained tokens from the World of Women, Doodles, Otherdeed, and Metacard collections. Since their purchase, these assets have experienced a depreciation ranging from 89.7% to 97.4%.
In August, Deepak Thapliyal, who owns the high-value CryptoPunk #5822 purchased in 2022 for 8,000 ETH (approximately $23.7 million at that time), divested the asset without revealing the sale price. This transaction became the fourth most expensive NFT sale of 2022 amidst the market frenzy.
Speculation within the community suggests the token was sold at a loss. Rumor has it that the buyer is an individual on X known as VOMBATUS, who allegedly acquired the token for 1,500 ETH (~$3.9 million), 80% lower than its prior price.
The Rise and Fall of OpenSea
Total non-fungible token volume peaked at over $6 billion in January 2022. However, by July 2024, it plummeted to under $430 million. NFTs still exist, but their condition is dire.
OpenSea, the former giant among NFT marketplaces, is facing an even more precarious situation. According to The Verge, the company is dealing with scrutiny from the Securities and Exchange Commission and the Federal Trade Commission, along with international tax agencies, increasing competition, allegations of bias, and layoffs.
Moreover, OpenSea’s valuation has nosedived from $13.3 billion to $1.4 billion after one of its major investors, New York’s Coatue Management, reduced their estimated stake by 90%, from $120 million to $13 million.
Nevertheless, The Verge reports that the company still has some positive indicators. An internal document reveals that as of November 2023, OpenSea maintained $438 million in cash and $45 million in cryptocurrency reserves. With this financial buffer and a new strategic direction, the company hopes to navigate through these turbulent waters.
“It had $438 million in cash and $45 million in crypto reserves as of November 2023, according to an internal document, and it’s coasting on that capital as it hopes a ‘2.0’ pivot will help it navigate choppy seas.”
What lies ahead for the NFT market?
The NFT marketplace has predominantly relied on platforms like OpenSea and Rarible for issuing and trading NFTs.
There are now lending services and derivative trading platforms centering on NFTs from significant collections, enabling users to speculate on NFTs without direct ownership.
Nevertheless, the bearish trend in the non-fungible token market continues, evident in the rapid price drops of NFTs from top-tier collections.
