In the third quarter of 2023, the non-fungible token (NFT) market experienced a significant downturn, marking the worst performance in three years. According to a Binance Research report, Q3 NFT sales totaled $299 million, primarily attributed to the decline in ether (ETH) prices and the decreasing floor prices of major collections.
Major NFT Collections Hit Hard
September 2023 saw the sharpest decline in NFT sales since January 2021, with major collections such as Azuki, Bored Ape Yacht Club, and Mutant Ape Yacht Club witnessing a quarter-on-quarter drop of over 25%. Gaming and metaverse-related NFT collections were hit the hardest, plummeting by more than 40% in the NFT market.
The average NFT price in September dropped significantly to $38.17, compared to the peak of $791.84 in August 2021. Moreover, the average number of daily unique NFT buyers fell by 14% quarter-on-quarter to approximately 53,000. Analysts pointed to a challenging market environment and low liquidity as the primary reasons for this decline.
Ethereum and Immutable Gain Traction Despite Poor Q3 NFT Market
Despite the overall decrease in NFT sales, Ethereum and its layer-2 scaling solution, Immutable, experienced increased shares in the NFT market. Ethereum saw a 6% rise, while Immutable witnessed a 4% growth. Immutable, the platform hosting popular blockchain games like Gods Unchained, led the sales chart in Q3.
Gaming-related NFTs gained popularity in the NFT market, with Gods Unchained, Axie Infinity, NBA Top Shot, NFL All Day, and Mythical Beings being the top five collections in terms of transaction count. Analysts observed that despite the sales decline, Q3 exhibited overall growth, potentially due to reduced fees and moderate ETH prices.
Mixed Trends in the Crypto Market
In the broader crypto market, Q3 2023 witnessed a significant 8.6% decrease in total market capitalization, despite rallies following legal victories for Ripple Labs and Grayscale. Crypto fundraising activities also saw a decline, reaching the lowest levels since Q4 2020, with fundraising rounds and raised funds dropping by 24.9% and 21.4% respectively.
On a positive note, Bitcoin (BTC) showed resilience, surging by 63.1% in year-to-date gains, driven by the excitement surrounding spot Bitcoin exchange-traded fund (ETF) filings by major traditional finance players. Other assets like Ripple (XRP) and Solana (SOL) also experienced substantial gains, indicating continued institutional adoption within the crypto space.