Decreasing market cap of NFT projects is due to manipulations by bad actors in the ecosystem.
On Feb. 9, DappRadar published a report showing that the market cap value of Ethereum NFTs fell by 59.60%, from $9.3 billion in 2022, to around $3.7 billion in early 2023.
DappRadar’s study is based on the market´s capitalization analysis of 81 of the largest NFT collections running on the Ethereum network.
As informed via Twitter, DappRadar claims that “by employing a machine-learning algorithm, DappRadar generates an accurate estimate of the individual value of each NFT.”
According to DappRadar, the Terra Luna collapse in May 2022 was the main cause of the loss of market capitalization of 88% of NFT projects running on Ethereum by June 2022.
Therefore, the decline in the market cap of NFT projects is not due to a lack of interest from investors, but rather due to the manipulations of bad actors in the ecosystem.
This is likely the main cause of the largest crash in the cryptocurrency industry, as during the FTX crash, the market capitalization of the entire NFT ecosystem collapsed as a result of the global cryptocurrency market.
These Were the Highest Profiting NFT Collections on Ethereum Since 2022
The report found that some projects launched during 2021 and early 2022 saw “significant market capitalization growth” of up to 260%. Among those projects were the Azuki, Pudgy Penguins, and Degen Toonz collections, whose market capitalization increased by 113.89%, 260%, and 204%, respectively.
Among the new NFT projects, launched after the fall of Terra Luna, are: The Potatoz with a market capitalization growth of 134.68%, Renga with 211.63%, DigiDaigaku with 209.88% and God Hates NFT with 1,653.28%.
It is worth mentioning that all of these projects achieved spectacular growth, despite ETH, the native currency of the Ethereum network, experiencing a 60% price drop over the past year due to the bear market.
Bored Ape Yacht Club Dominates the Market
According to DappRadar, Yuga Labs, the parent company of the Bored Ape Yacht Club project, has dominated the Ethereum network’s NFT market, “establishing itself as a leading player in the NFT sector,” despite the exponential decline of other projects.
While Yuga Labs funding accounts for 67% of the total market value of Ethereum NFT, Bored Ape Yacht Club’s market cap depreciated 64.92%, from $2.6bn to $934m, by the end of 2022.
However, that hasn’t stopped Yuga Labs from buying two of the biggest NFT collections on the market, CryptoPunks, and Meebits, for an undisclosed sum to date. Both collections are already experiencing a significant recovery, after suffering falls of up to 60% in 2022.
Now that the cryptocurrency market is showing signs of recovery, though, the NFT ecosystem probably has some chance to breathe. And green pastures in the future may be seen, as trading activity around blue-chip collections has recently started to pick up, and there are even NFTs taking over the Bitcoin network.
By Audy Castaneda
