A recent study has revealed that 95% of the collections of non-fungible tokens are worthless as the market for the once-hyped revolution in cryptocurrency and digital art has collapsed.
NFTs were the darlings of the cryptocurrency world in 2021 and 2022, with nearly $2.8 billion in monthly trading volume recorded in August 2021, and reports of million-dollar deals for sales of certain NFT assets.
But the study by dappGambl, a community of experts in finance and blockchain technology, based on data from NFTScan and CoinMarketCap, showed that of the 73,257 NFT collections it identified, 69,795 (95.2%) have zero value.
"This highlights the incredibly high-risk nature of the NFT market and underscores the need for careful due diligence before making any purchases, especially ones of high value," the study said. "This daunting reality should serve as a sobering check on the euphoria that has often surrounded the NFT space. Amid stories of digital art pieces selling for millions and overnight success stories, it is easy to overlook the fact that the market is fraught with pitfalls and potential losses."
The study said 79% of those collections remain unsold, meaning the market is oversaturated with sellers while potential buyers are being more discerning than ever in what they purchase.
Among the top 8,850 NFT collections identified by CoinMarketCap, the study found 1,614 had zero value. A total of 66 were valued at less than a penny, 368 were valued between a penny and 10 cents, 615 were valued between 10 cents and a dollar, and 867 were valued at between $1 and $100. The vast majority (3,643) were valued at between $100 and $200.
Because 13% of those collections were worthless, the study said that indicates "a significant portion of even the most prominent collections [is] struggling to maintain demand."
Less than 1% (80) of the collections featured a price tag above $6,000, "shedding light on the rarity of high-value assets even within the cream of the crop," the study said.
"It becomes clear that a significant portion of the NFT market is characterized by speculative and hopeful pricing strategies that are far removed from the actual trading history of these assets," the study said. "Additionally, this apparent disconnect between listed prices and actual sales could suggest that many sellers are waiting for another massive surge in NFT interest akin to the boom witnessed in 2021, which may not ever occur again."
Michael Katz is a Newsmax reporter with more than 30 years of experience reporting and editing on news, culture, and politics.
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