The most popular blockchain for NFTs is Ethereum (ET -1.93%), so it makes sense that anyone who invests in Ethereum pays attention to the collapse of the NFT market. According to some estimates, 80% of all NFTs are traded on the Ethereum blockchain and the two most popular NFT collections – CryptoPunks and Bored Ape Yacht Club – have been created on it.
While NFT activity appears to have peaked in early 2022, its slowdown was particularly dramatic this summer. Some NFT markets are turning into ghost towns. The daily volume of transactions on OpenSea (the most popular NFT market) has decreased by 99% in the past 90 days. Starting prices for Bored Apes have dropped by more than 50% in the past 90 days. Some tech companies are even trying to completely distance themselves from the term “NFT”, preferring to call them “digital collectibles”.
Ethereum against other blockchains
If there is a bright side here, it is that Ethereum seems to hold up much better than other blockchains where people are minting, buying and selling NFTs. The place to look is DappRadar, which has detailed data on transaction volumes, number of traders and number of sales. And you can also focus on specific blockchains for side-by-side comparisons.
So, at a glance, you can see that the most popular NFTs on Ethereum are the Bored Apes. On Wednesday morning, in the previous 24 hours, the top five sales all came from the Bored Ape Yacht Club collection, with prices ranging from $ 131,000 to $ 170,000 for a single NFT. These prices might sound impressive, but they actually represent a huge drop in expected sales prices over the summer. Even two weeks ago, the best-selling Bored Ape NFT sold for $ 1.46 million. The price swings were even more dramatic for NFT collections without the fame and stardom of the Bored Apes.
In terms of transaction volume, other NFT collections, such as Moonbirds, are actually seeing more activity than Bored Apes. Now compare it to the situation on other blockchains. ON Avalanche (CRYPTO: AVAX), for example, literally nothing is happening. Every NFT collection except one has the number “0” next to it. Not well.
Also consider that NFTs aren’t the only game in town for Ethereum. If you think of all the activities taking place on the Ethereum blockchain, it includes areas such as decentralized finance (DeFi), blockchain gaming, and Web3 (a general term used to describe the expected “next iteration of the internet”, which includes things like the metaverse). Each of these is a source of potential transaction volume for Ethereum.
Right now, blockchain gaming appears to be increasing gaming in terms of activity. According to a recent survey by DappRadar, blockchain games now account for 60% of all blockchain activity. And blockchain gaming is, you guessed it, another source of strength for Ethereum. Some of the most popular metaverse games and experiences are based on Ethereum. According to DappRadar, games will be a significant driver for months to come. So even though the NFT segment isn’t doing well now, other segments are showing strength.
The new wave of NFT
Finally, one thing to keep in mind is a potential new wave of NFT business coming to market. Meta platforms (NASDAQ: META), for example, announced the integration of NFTs with both Facebook and Instagram. And eBay (NASDAQ: EBAY) entered the NFT game in the last year with the aim of reinventing NFTs as “digital collectibles”. If you are an Ethereum investor, you have to hope that this new business will help support NFT minimum prices and attract more people to buy and sell. If people see their friends and family post NFTs on Instagram, it’s not unreasonable to assume that even more of them may be inspired to do so.
Is Ethereum still a purchase?
Yes, the collapse of the NFT market should be a cause for concern if you are an Ethereum investor. But it appears that Ethereum is holding up better than other blockchains, with perhaps the exception Solana (CRYPTO: SOL). The Ethereum blockchain is certainly diversified into sufficiently diverse areas to be able to absorb a slowdown in NFT-related transaction activity. So don’t let a slowdown in the NFT market stop you from entering Ethereum, which is still the leading Tier 1 blockchain in the world. If you take gaming and the metaverse into consideration, there is still huge upside potential for Ethereum after the merger.
Randi Zuckerberg, former director of market development and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Dominic Basulto has positions in Ethereum. The Motley Fool has positions and recommends Avalanche, Ethereum, Meta Platforms, Inc. and Solana. The Motley Fool recommends eBay and recommends the following options: Short October 2022 $ 50 eBay calls. The Motley Fool has a disclosure policy.