Analysts Suggest 'Silent Crash' May Be Underway As NFT Prices Floors Plummet

Declining prices across the NFT space seem to suggest that the hype surrounding it may be wearing off.  

What Happened: The hype surrounding the NFT market in February was unparalleled, with the growing interest in the space even out shadowing Bitcoin’s rise above $60,000.

However, that hype seems to be dying out as recent data indicates that the market has been in a continuous downtrend over the past month.

According to NFT marketplace data monitor NonFungible.com, the average daily value of NFTs fell from $19 million to $3 million on Mar 25 – declining by over 85% on average.

Why It Matters: Some market proponents have pointed out that, unlike other markets, the NFT space is highly illiquid in nature, making an impending crash much more difficult to predict.

In liquid markets, sellers adjust prices in real-time, whereas in the NFT space, it may take them weeks or months to realize that there are no buyers for their unique non-fungible collectibles. As a result, markets are much less reactive, and the phenomenon prompted analysts from Egirl capital to dub NFT price corrections as a “silent crash.”

Popular NFT marketplaces like NBA Top Shot and CryptoPunks too have seen their average value and number of transactions on the decline since it peaked in mid-February.

@topshotanalytix @economist @girldadNFT for everyone wishing they got into TopShot in Jan instead of Feb. Well ... welcome to January. pic.twitter.com/IY1TslV8I0

— (@jfresshhh_) April 3, 2021

One NFT collector who charted the decline in Top Shot sales since the beginning of the year said, “There’s less volume on the $500-$2000 moments than there was in Jan, which is crazy, considering the user base is probably 5-10x. Gives you an idea of the type of “collector” currently on the site.”

According to him, the majority of users who joined around Feb 21 were trying to “catch a ride on the money train” and couldn’t hold their NFTs for more than a few days without selling.