NFT market cap returns to pre-hype levels near $1.5B
The global fungible token (NFT) market cap has fallen below $1.5 billion, returning to levels seen before the sector's rapid expansion in 2021.
The rebound has been seen alongside the decline of the broader crypto market over the past two weeks, according to CoinGecko data. On January 23, the total crypto market capitalization stood at around $3.1 trillion before falling to $2.2 trillion on Friday.
Major assets such as Bitcoin (BTC) slipped from $89,000 to $65,000, while Ether (ETH) fell from $3,000 to $1,800 at the same time. According to NFT data aggregator CryptoSlam, Bitcoin and Ethereum are the top two networks for NFTs by 30-day trading volume.
The decline in NFT market value reflects the sector's continued decline following several high-profile shutdowns and exits.
Increasing supply conflicts with decreasing demand.
The market reset was exacerbated by the growing imbalance between NFT supply and buyer demand.
As reported by Cointelegraph on December 31st, overall NFT supply continues to expand as sales and prices decline, pushing the sector into a higher volume, lower price structure.
According to CryptoSlam data, the number of NFTs in circulation will reach nearly 1.3 billion by 2025, a 25% increase from 2024. Total NFT sales fell 37 percent year over year to $5.6 billion, with the average sale price falling below $100.
The difference suggests that as operations become cheaper and barriers to service are reduced, buyer engagement and spending cannot keep up.
Related: US prosecutors drop OpenSea NFT fraud case after appeals court overturns
Corporate exits and platform closures add to the pressure
The drop follows a series of highs that reflect the market's pullback. On January 7, footwear giant Nike quietly offloaded RTFKT, the digital crowdfunding studio it acquired at the height of the NFT boom.
The reported sale follows the company's decision to cease operations due to investor lawsuits.
In addition, the closure of shopping centers has accelerated. Nifty Gateway, one of the first NFT platforms, said it will shut down on February 23 and enter exit-only mode. Gemini-proprietary platform is declining, he mentioned the prolonged market failure.
On January 28, social NFT platform Rodeo announced it was shutting down due to its inability to scale sustainably. Rodeo said it will transition to read-only mode before shutting down completely in March.
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