With questions floating around on why crypto is down today, the bear market sentiment has finally influenced the top NFT projects resulting in a total NFT market crash.
Some of the best NFT projects have toppled with their floor pricing being slashed in half. All thanks to the recent crypto crash that ended up sweeping away the glory of several blue-chip NFTs.
While the crypto market is witnessing diluted investor interest, we have collated some insights on why the NFT market is crashing at a rapid pace?
The Current NFT Market Crash: What Happened?
Cryptocurrencies and NFTs have an undeniable connection. With the overall prices of cryptocurrencies being down by nearly 24%, some of the best NFT projects have also seen a rapid decline in their floor prices in the last 24 hours.
Several blue-chip NFTs including Bored Ape Yacht Club saw their prices slashed by almost half in the last seven days. The floor price has now dropped to 67.89 ETH - around $106,347.65. Meanwhile, their Mutant Ape Yacht Club prices are also down to 12.9 ETH to $20,207.46.
The recently launched Solana-based Moonbirds also suffered the wrath of the current crypto crash. Its floor price dropped to 12.5 ETH (19,580.88 USD)
Why Are NFTs Crashing?
As stated above, NFTs are directly linked with leading cryptocurrencies. With the entire crypto market being doused with volatility right now, it seems that the NFTs are taking a massive hit amid all this.
With prices of Ethereum crashing below $1400, several cryptocurrencies linked with ETH are also suffering. Their prices have halved due to turbulent market conditions.
Apart from that, crypto critics are also talking about a peculiar bathtub effect. They define this as a process when a large NFT project is put up for sale that indirectly impacts the prices of other NFT projects. This is because investors are trying to sell those NFT positions to free up currency to buy the new NFT.
Another prominent reason why the NFT market is crashing is the declining investor interest in NFTs. According to the recent Google Trends data, there has been a significant drop in the term "buy NFTs", recording a steep fall of 80%. Along with that the term "sell NFT ' fell 83% in the Google search interest index. This all signals a deteriorating interest of users in the NFT domain.
The recent Luna crypto crash, alongside the USDD Depeg and Acala depeg has also influenced the overall stance of investors. It may have pushed them to slow down their overall NFT/crypto trading.
NFT Market Recovery
According to NFT gaming platform Balthazar, the report adds that despite the NFT marker experiencing the dearth of investors citing crypto winter, 2022 will notably see a steady NFT market recovery with a growth rate of nearly 239%.
The upcoming ethereum merge coupled with the ethereum triple halving update is helping ETH gain its former price momentum
According to John Stefanidis, CEO of Balthazar, the brunt of crypto winter has already begun to soften, as leading NFTs have started to show signs of recovery. However, we will still have to wait and watch to comment on how NFTs will recover their usual pace.