Non-fungible tokens, or NFTs, quickly overtook DeFi in popularity in 2021, with digital artists like Beeple recording multi-million NFT sales, while celebrities like Gary Vaynerchuk, and Snoop Dogg showed their affection towards the new type of cryptos.
However, as with the realm of decentralized finance, the NFT popularity is closely tied to the broader crypto market sentiment, but after the LUNA crash, cryptos are officially in bear territory.
Indeed, the search volume decrease comes just six months after the term “non-fungible token” filled the chart with a maximum score of 100, according to the Interest over time metric from Google. The search engine giant now claims the same term is only able to reach a score of 26 out of 100, which is the lowest value since the popularity surge, resulting in a 74% drop.
Google’s data is backed up by marketplace figures, as the major NFT marketplaces’ monthly volumes reached an all-time high of $16.54 billion. The end of May marks just around $4 billion in volumes, equating to a 75% decline from January’s volume.
A further delve into NFT data reveals that some of the NFTs that contributed to January’s milestone include the Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), and Axie Infinity, but BAYC NFT sales volume, for example, dropped to around $200 million, a 41% decrease in just four months.
Broader market crash reaction?
Bears have settled into the crypto space, which is the main reason why some of the best-performing cryptos are not climbing over their resistance zones. Bitcoin, for example, just broke above the $30,000 mark, but the low trading volumes indicate that the world’s largest crypto may be heading back below the resistance. Ethereum, however, did not manage to stay above $2,000 and currently trades at $1,886.64 with an 8% weekly price decline.
On the other hand, the bearish crypto market may be “cleansing” for the ecosystem, according to Polygon co-founder Mihailo Bjelic, who noted that the market became “maybe a little bit irrational, or maybe a little reckless,” as the total crypto market cap grew by 12.5 times between November 2019 and November 2021.
“When the times like that come, [a] correction is normally needed, and at the end of the day [is] healthy,” Bjelic added.
Crypto market analyst The DeFi Edge added that in bearish markets, the incentive to run scams and steal funds drops proportionally, especially when transactions on the Bitcoin network dropped from 335,411 on November 9 to 207,859 as of press time.
The right time to enter the crypto market?
Another point of view suggests that a bear cycle is ideal for onboarding the crypto sector, according to Jason Ye, partner at crypto investment fund ROK Capital.
“It’s time for traders to deploy their cash reserves in order to get an upside in the next bull cycle. As always, the winners in the bull market are the people who built in the bear market.” Ye noted, adding that many successful crypto projects were launched during a bearish cycle.