A recent report from DappRadar revealed that the trade volume on the biggest NFT marketplace is now down nearly 100%.
2022 doesn’t seem to be the best year for OpenSea.
In January, New York’s Southern District charged and arrested OpenSea’s former product manager, Nathaniel Chastain, for wire fraud. Then, a few months later, the NFT marketplace fired 20% of its staff due to the upcoming CryotoWinter. There’s the CryptoWinter itself.
And now we have this situation.
OpeanSea has experienced a huge drop in users recently. Most of these users abandoned NFT trading altogether. Of course, this led to a notable drop in transactions made on the marketplace. Just how bad is it? Trading volume is currently down 99%.
The Decline in NFT Trading on OpenSea
Several data-analysis services, including DappRadar, published reports on the decline of NFT trading activity in recent months.
DappRadar’s report is particularly interesting as it contains insights from the team’s co-founder and CEO, Skirmantas Januškas.
According to Januškas, OpenSea processed around $5 million in transactions on its platform on August 28. While the number might seem normal to an untrained eye, those in the know will tell you that it’s a 99% drop compared to just a few months ago
The trade volume on OpenSea actually peaked this year. On May 1, the platform processed over $405 million. But in just three months, the NFT marketplace lost over 90% of its users.
Of course, the decline in trading activity also affected the prices of popular NFTs.
How CryptoPunks and BAYC Prices are Reacting
Two of the most popular NFT projects, CryptoPunks and Bored Ape Yacht Club, have recently plummeted in prices.
The floor of CryptoPunks has dropped around 20% from July when it peaked at 83.72 ETH. As for the BAYC project, the price has fallen by a whopping 53% from its high of 153.7 ETH.
Both projects have been around for years and are some of the most popular in the NFT space. An NFT’s floor price is the minimum bid the owner will accept for it. Since there’s not a lot of buying interest, the prices are falling as owners are forced to lower their asking prices.
What’s Causing the Drop in NFT Prices?
Nearly 90% of all NFT traded on OpenSea are hosted on the Ethereum Blockchain. The price of ETH has been on a steady decline since November last year, which is likely one of the main reasons why NFT prices are falling.
In November 2021, the price of ETH nearly reached $5,000. However, by August 2022, it fell to around $1,500. Ironically, a lack of new interest in the NFT market has contributed to the decline in price.
Where From Here?
Regardless of market trends, a large community of NFT enthusiasts remain committed to the technology and believe it has a bright future. Art-oriented NFTs are still selling and keeping the ecosystem alive.
It’s important to note that a project’s success doesn’t depend on the price of its native token. The price is just a representation of market sentiment and doesn’t necessarily reflect the underlying value of the project.
Time will tell whether the current slump is just a phase or the start of a more prolonged decline.