The explosion of the NFT market in the second half of last year has many people excited about the prospects for using such technology.
Artists and investors alike felt they gained a lot from experimenting with NFTs, but a new report from Nansen indicates that the NFT craze may be dying down.
About a third of all NFTs created since the start of 2021 are now more or less worthless. There is hardly any trading activity for these NFTs, and when there is no trading activity, the value of the asset begins to plummet. You might think that two-thirds of NFTs are still profitable, but despite this, another third of them are still loss-making.
While this third of NFTs are being traded, the value at which they are being traded is not even high enough to cover the cost of minting them, all things considered and taken into account. This makes it a less than ideal asset for traders, as it is the kind of thing that could potentially cause them to lose money every trade. Only about a third of the 19 million NFTs analyzed in this study were traded at a floor price above their strike cost.
This could be explained by the fact that the vast majority of NFT miners do not invest much in their asset. They are also not active traders, and many of them are just participating in a fad without fully understanding the implications. While successful NFTs are profitable to a very large extent, there are few of them. NFTs that lose their value continue to do so, and they may soon be worth nothing at all.
Average cost of NFT strike over time
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