DappRadar: monthly NFT trading volume fell 81% from January 2022 to July 2023, while monthly NFT sales have dropped 61%, as traders return to cryptocurrencies
Nonfungible tokens, along with the rest of crypto, had a painful comeuppance last year … Linda Ang : There're only 2 questions worth asking IMO: — 1. Whoever decided NFTs were but a speculative asset class to begin with? …
Context & Ripple Effects
The reported decline extends a downturn already visible in the steep 2022 drop in NFT sales and active wallets and the collapse in NFT trading volumes later that year. It shows the market had not simply rebounded alongside broader crypto activity.
The contrast between falling NFT activity and traders’ return to cryptocurrencies matters because it separates demand for tradable crypto assets from demand for NFT collections. Later, NFT lending activity also contracted sharply, reinforcing the pressure on NFT liquidity and collateral use.
First-order effects
- NFT marketplaces, creators and holders face materially less trading liquidity and fewer sales, making price discovery and resale harder.
- Trading attention shifts toward cryptocurrencies, reducing near-term transaction activity in NFT-focused applications and services.
Second-order effects
- NFT platforms and projects are pushed to compete for a smaller active trader base, with utility-oriented use cases such as gaming becoming more important than resale-driven demand.
- Lower NFT turnover weakens the practical appeal of using collections as collateral, constraining adjacent lending activity and the fees built around it.
Third-order effects
- If crypto rallies continue to bypass NFTs, the sector is likely to consolidate around projects with durable user utility rather than broad collection speculation.
- The episode deepens the crypto legitimacy gap: NFT businesses will need to demonstrate demand beyond cyclical trading volume to sustain infrastructure and financial products.
The trend: NFT markets are moving from broad, speculation-led trading toward a narrower test of whether utility can support lasting demand.