The NFT art market has grown more than 800% in 2021 so far to $490 million – but the boom could now be heading towards bust
The market for non-fungible token art has boomed in 2021, swelling by more than 800% from $52 million at the start of the year to $490 million at the end of the April.
But there are growing signs that interest in NFT art is waning, with the creator of the most expensive digital art piece of all time himself labelling the market a bubble.
Non-fungible tokens, or NFTs, are a special class of digital assets that cannot be exchanged with one another for equal value, or broken down into smaller bits. They cannot be duplicated and ownership is verified using blockchain technology, making them appealing to artists.
They have proven to be the hottest new trend in the crypto world in 2021: even world famous artist Damien Hirst has got in on the game.
In 2020, there had been just 53,663 unique works of NFT art sold on the five largest platforms, according to a new report from blockchain development company ConsenSys, in which JPMorgan and UBS recently invested.
But the market has expanded rapidly, with 151,977 pieces of NFT art sold in the 30 days to Thursday, the report said.
“The pandemic created a fertile environment for obsessively online and out-of-work artists to monetize their work,” ConsenSys wrote.
NFT art only makes up about 10% of all non-fungible token sales, ConsenSys’ report said. Sports NFTs, such as NBA Hot Shot tokens, and collectibles, such as CryptoPunks, dominate the market in terms of sales.
However, there are growing signs that the NFT market is slowing sharply, with art particularly hard-hit.
The total amount of NFT sales has declined by almost 28% and the total value of sales fell by almost 14% between March 30th and April 28th, data from nonfungible.com showed on Wednesday.
Sale volumes for art NFTs declined by almost 42%, making this the sector with the biggest losses. In the same timeframe, prices dropped by 40.5%. This translates to a sales value drop from over $71 million to $41.5 million.
Digital artist Beeple, who captured the art market’s attention when he sold an NFT for $69 million in March, compared the market to the dotcom bubble of the 1990s, which burst spectacularly in 2000.
“There was a bubble with the internet, it didn’t kill the internet. People kept using the internet, it just kind of wiped out all the c***”, he told The Street.