What happened to NFTs?

NFTs are digital assets that represent ownership of unique items such as art, music, or digital creations. In 2021, the NFT industry exploded in popularity, with highlights like Beeple selling a digital artwork for $69 million and collections like the Bored Ape Yacht Club becoming a mainstream trend.

NFTs could be bought with Cryptocurrency which uses blockchain technology to record transactions securely and transparently. Popular cryptocurrency examples include Bitcoin and Ethereum. It opened up a new revenue stream for many artists and creators and it seemed a bright future for copyright and ownership. But why did it decline so fast? What actually happened?

The collapse of big systems in 2022

Terra Luna was a trading system designed to keep cryptocurrency stable in value, but when many people started withdrawing money after earning high interest in May 2022, the system couldn’t handle it. This caused the value to crash, investors panicked, and the currency became worthless.

Later in 2022 major cryptocurrency exchange platform FTX collapsed because of financial issues and fraud. It triggered a massive loss of trust in crypto by investors and users and it eventually led FTX to bankruptcy.

Global inflation

During this time, global inflation rose, increasing household expenses and leaving people with less money to spend. As a result, investing in expensive digital assets, which were often easy to replicate, became less appealing to many consumers.

Market oversaturation

Lastly, the overload of NFT projects created supply that far exceeded demand, causing most collections to lose value and investors to lose interest.

What about an NFT revival?

Is it an “NFT or Crypto winter” like we’ve seen with AI? Are there speculations about a revival?

In October 2024, the NFT market started to recover, with sales growing by 18% to $356 million, the first increase in months. Experts say this could be due to more use of NFTs in gaming, the metaverse, and creative business ideas. While many NFTs are still inactive, these signs suggest the market could make a comeback as things improve.

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