The market of non-fungible tokens (NFTs) is experiencing tough times as one in three NFT collections have little or no trading activity post-minting at all. Nansen, a blockchain analytics firm, has captured in a recent blog post the downward trend that overwhelmed the whole market of digital collectibles.
The analysts say their findings are also confirmed by on-chain data. For instance, the average minting cost peaked in May 2021 at 0.56 ETH, but since July 2021, the average cost ranged dropped to 0.1 ETH or sometimes even to 0.07ETH. The Nansen team says:
We hypothesize that a possible explanation for this phenomenon is that NFT minting is increasingly competitive with more projects being introduced to the market, thereby pushing the average mint cost down.
The main pump in the market happed between January 2021 to February 2022, when the number of minted NFT collections jumped significantly by over 4800%, from 39,802 collections to 1,970,886.
However, it seems that the proportion of NFTs that have been sold on the secondary market has also been declining since summer last year. Now, one in three NFTs also have a trading floor price below the mint costs, Nansen points out.
Sales revenue is also on the decline with the minimum average profit at 4 ETH, while the peak was 115 ETH. The analysts say the profits of top minted collections follow a volatile trajectory.