NFT sales fell to their lowest level in a year after the cryptocurrency crisis

The cryptocurrency crash has hurt sales of non-fungible tokens, and in June, sales hit their lowest point in a year.

NFTs let a person own a one-of-a-kind digital object, usually a piece of virtual art, even though it’s easy to make copies of it. A blockchain is a decentralized digital ledger that keeps track of who owns what.

Chainalysis, a crypto research company, says that sales of NFTs were just over $1 billion (£830 million) in June. This was their lowest month since June of last year, when sales were $648 million. In January, sales hit a high point of $12.6 billion.

Ethan McMahon, an analyst at Chainalysis, said, “There is no doubt that this drop is linked to the overall drop in crypto markets.”

“Times like this inevitably lead to consolidation within the affected markets, and for NFTs we will likely see a pullback in terms of the collections and types of NFTs that reach prominence.”

In November, the value of the cryptocurrency market was almost $3 trillion. It is now worth less than $1 trillion.

NFTs use a blockchain, the decentralized ledger that bitcoin created to keep track of who owns the cryptocurrency, to keep track of who owns them and make it possible to trade them. Most are built on the Ethereum blockchain, which is run by a method called “proof of work,” which uses a lot of carbon.

At its peak, the NFT market was bringing in record-breaking amounts. For example, a token representing Twitter co-founder Jack Dorsey’s first tweet sold for $2.9 million. A digital collage by artist Beeple sold for $69 million; the main token for the “play to earn” video game Axie Infinity was worth $9.75 billion; and Coca-Cola made more than $575,000 by selling digital things like a customized blazer that could be worn in the metaverse.

Chainalysis data show that the most NFTs were sold in January. When bids reached $14,000 in April, a sale on the Dorsey NFT was called off.

DappRadar, a service that studies NFTs and blockchain-based video games, says that the demand for what are called “blue chip” NFT collections has stayed the same.

Pedro Herrera, who is in charge of research at DappRadar, says that the price of the cheapest NFT at the Bored Ape Yacht Club has gone down by only 1% in the last month, to $90,000. “Blue chip collections are doing much better than almost all NFTs,” he said.

Chainalysis says that NFT sales were more than $40 billion last year and are expected to be more than $42 billion by 2022. So far, more than half of all sales for 2022 have been made in January and February.

Concerns about rising inflation and higher interest rates, which have made people less interested in riskier assets like tech stocks and digital assets, have had an effect on the cryptocurrency market.

The collapse of Terra, a so-called stablecoin whose value was supposed to be tied to the US dollar, has also hurt trust in crypto assets, as have problems at crypto-related financial institutions like the Celsius Network, a lender that has stopped withdrawals.