The NFT Market has taken a setback, with the number of wallets making more than $100,000 in profit from NFT sales falling sharply since the beginning of the year.
According to BanklessTimes.com, wallets earning over $100,000 in profit from NFT sales have dropped from 4536 to 272, a decline of 94%.
BanklessTimes CEO Jonathan Merry said, “Even though the number of profitable accounts has decreased, the total amount of money being made by NFT investors has remained relatively stable.
Additionally, early investors in the NFT market have already sold off their positions and are no longer making profits. This would explain why the number of profitable accounts has declined so sharply even as the total value of the NFT market has continued to increase.”
Reasons why the NFT market is failing
Lack of use cases: Most NFTs are bought and sold as speculation, with investors hoping to cash in on the hype. However, there are very few actual use cases for NFTs right now, meaning there’s little reason to hold onto them long-term.
Low liquidity: NFTs are often difficult to sell, as few exchanges list them and even fewer buyers. This lack of liquidity makes it hard for investors to cash out of their positions, leading to price drops.
High fees: Buying, selling, and transferring NFTs often comes with high transaction costs, eating into any profits investors might make.
Lack of regulation: The lack of regulation around NFTs makes it challenging to protect investors from scams and fraud. This Wild West environment is likely to deter some potential investors.
Poor user experience: NFTs are often difficult to use and understand, which makes it harder for mainstream investors to get involved. Until the user experience improves, the NFT market is likely to struggle.
Leading NFT projects
Despite the challenges, there are still some NFT projects that have managed to find success. So far this year, the top four NFT projects by market cap are Otherside, Bored Ape Yacht Club, Mutant Ape Yacht Club, and CryptoPunks. These projects are owned by Yuga Labs, a major player in the NFT space.
Despite the challenges facing the NFT market, these leading projects show that there is still demand for NFTs. If the market can overcome its current challenges, it could resume its growth in the future.