Six months into 2022, the situation is looking ugly for NFTs

A non-fungible token displayed on the website of NFT marketplace OpenSea on Feb 28, 2022. PHOTO: REUTERS

LONDON (REUTERS) - The NFT dream is not dead, but it has taken a big beating.

The market for non-fungible tokens (NFTs) shone gloriously last year as crypto-rich speculators spent billions of dollars on the risky assets, pumping up prices and profits. Now, six months into 2022, it is looking ugly.

Monthly sales volume on the largest NFT marketplace, OpenSea, plunged to US$700 million (S$977 million) in June, down from US$2.6 billion in May and a far cry from January's peak of nearly US$5 billion.

By late June, the average NFT sale sunk to US$412, from US$1,754 at the end of April, according to, which tracks sales on the Ethereum and Ronin blockchains.

"The crypto bear market has definitely had an impact on the NFT space," said Mr Gauthier Zuppinger, co-founder of

"We have seen so much speculation, so much hype around this kind of asset," he added. "Now, we see some sort of decrease just because people realise they will not become a millionaire in two days."

The NFT market has collapsed along with cryptocurrencies, which are typically used to pay for the assets, at a time when central banks have jacked up rates to combat inflation, and risk appetite has withered.

Bitcoin lost around 57 per cent in the six months of the year, while Ether has dropped 71 per cent.

Dip or death spiral?

For critics, the crash confirms the folly of buying such assets, which are tradeable blockchain-based records linked to digital files such as images or videos, often artwork.

Malaysian businessman Sina Estavi, who bought an NFT of Twitter founder Jack Dorsey's first tweet for US$2.5 million last year, struggled to get bids of more than a few thousand dollars when he tried to resell it in April.

But Mr Benoit Bosc, global head of product at crypto trading firm GSR, sees the downturn as the perfect time to build a corporate NFT collection - the crypto equivalent of the fine art that traditional banks display to impress clients.

Last month, GSR spent US$500,000 on NFTs from what Mr Bosc calls "blue-chip" collections - those with large online fan bases.

His purchases included an NFT from the Bored Ape Yacht Club, a set of 10,000 cartoon monkeys made by United States-based company Yuga Labs and promoted by the likes of celebrities Paris Hilton and Jimmy Fallon.

Such is the hype surrounding Bored Apes that Yuga Labs raised US$285 million in April by selling tokens it says can be exchanged for land in a Bored Apes-themed virtual world it has not yet launched.

Yet the average sale price for a Bored Ape tumbled to around US$110,000 in June, having halved since its January peak of US$238,000, according to market tracker CryptoSlam.

Game over or on?

Nonetheless, the future of NFTs is distinctly uncertain, as the era of low interest rates that encouraged investors to take risky bets comes to an end.

Some market watchers say the influence of NFTs on the art market will shrink. Meanwhile, even though the much-hyped vision for a blockchain-based metaverse has not materialised yet, enthusiasts expect NFTs to shake up the gaming industry, for example, by allowing players to own in-game assets such as avatar skins.

This risky combination of gaming and financial speculation may face difficulties, though. Most gamers prefer games that do not include NFTs or "play-to-earn" components, according to Mr John Egan, chief executive of technology research firm L'Atelier.

Although the groundbreaking new crypto regulations agreed by the European Union last week mostly excluded NFTs, Spain is separately seeking to clamp down on the way video games sell virtual assets for real money.

Meanwhile, the biggest NFT-based game, Axie Infinity, has seen its in-game token collapse to less than half a cent, down from a peak of 36 cents last year.

For Mr Egan, the NFT market is unlikely to recover in its current form.

But the underlying concept of creating unique digital assets is still "fundamentally important" and will have "massive applications" for the financial sector in future, he said.

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