Non-Fungible Tokens (NFTs) are about community, and they derive their value from it. The entire NFT space has recently seen a drastic decrease in volume after soaring to an all-time high in August. This comes as Ethereum sees previously high gas fees coming down to normal. The most popular NFTs collections in the space nosedived in double-digit percentages. One of them is the CryptoPunks NFT project.
What are CryptoPunks NFTs?
CryptoPunks, a collection of 10,000 24×24 JPEGs with unique identifiers stored on Ethereum blockchain, have been among the leading NFTs on the OpenSea marketplace by trading volume. Currently, CryptoPunks satisfy all the market performances except by volume.
According to NonFungible, an NFT data tracking website, the total NFT sale volume fell by almost $1 billion in just two weeks. The total NFT trading volume is currently $148 million, which is lower than the last low of $170 million on August 15, 2021.
How Hard Have CryptoPunks Been Impacted?
CryptoPunks have been raging over the past two months. In June, they barely had a $10 million trading volume. On August 6, 2021, they hit a local top of $190 million before tanking. However, the low formed on August 19, 2021, was 2X higher than their previous low of $12 million (this is good news and means more upside later).
On August 29, 2021, they made their all-time high of $357 million. But since then, they have had a two-week consistent dump to the current $25 million weekly volume. The future is uncertain for CryptoPunks and NFTs in general.
On September 14, 2021, the floor price for a CryptoPunk slid below 80 ETH, a clear indication that the Punks are losing value in the eyes of the community who hold them. CryptoPunk #1417 was put on sale for 79.99 ETH ($266,168) on OpenSea. While still a little lower than the previous floor price, the current owner of punk #1417 will make a nice profit since he bought it for only 0.9 ETH at the beginning of 2020.
Why is NFT Trading Volume Going Down?
Like all economic bubbles, the NFT one must pop at some point. While some have claimed that this 50% drop in volume is just a correction before the next leg up, others think the NFT hype is over. The sharp reduction in trading volume shows money is leaving the NFT metaverse. The million-dollar question is where it is going.
Recently, Decentralized Finance (DeFi) space has been regaining hype, and there are high chances that NFT volume is flowing there. Among other events, Zuwu, on Twitter, has gone on to expose some insider trading by Nate Chastain, Head of Product at OpenSea. This might also contribute to the drop in volume as people rush to dump their NFTs and secure their funds.
Parting Shot
NFTs are part of the future of the crypto industry. However, they are not mature yet. When people are unsure about something, they will sell and go to stable projects (DeFi) in this case. We now wait for what the future holds for NFTs.