NFT Volumes Dropped by 97% – Is Buying NFTs Still Worth it in 2023?

NFT Volumes Dropped by 97% - Is Buying NFTs Still Worth it in 2023?

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After peaking in January 2022, the NFT trading volume plummeted dramatically in just a few months, dropping by 97%. As a result, many investors are now wondering whether buying NFTs is still a good idea.

Today, we explore the current state of the NFT market and discuss the factors that have caused the decline. We also examine what is necessary to revive the market and how investors should approach their NFT portfolios.

Finally, we’ll examine whether or not buying NFTs is still lucrative in the current climate. This article should help you understand the future of the NFT market and how to make smart investments.

Does the NFT Market Have a Problem?

It’s no secret that the NFT market has seen a dramatic drop in trading volume in 2022. As a result, everyone is asking if buying NFTs is still a good idea.

Denying that the market is experiencing a downturn would be foolish. But whether or not it’s a good idea to buy NFTs right now depends on your strategy and risk tolerance.

For some investors, buying in during a bear market is an opportunity to acquire valuable assets at discounted prices. However, others may hold off until the market recovers before reinvesting.

As we’ll see below, understanding why the NFT market collapsed is crucial.

The Fall of the NFT Market

There are multiple reasons why the NFT market has seen a 97% drop in trading volume since 2022. For instance, the cryptocurrency landscape is more bearish than 2020, when the last cryptocurrency boom started.

Many consumers have lost trust in the NFT business due to scams and fraud. Going deeper, one could argue that many NFTs have a utility problem. Very few have real-world use cases, meaning they are hard to value and, therefore, difficult to trade.

We’re currently studying NFT’s possibilities and constraints, which causes some investor hesitance.

The Need for More NFT Utility

A great investor such as Warren Buffett said you should only invest in what you understand. If we apply this logic to NFTs, knowing how to use them and what they offer is crucial to your investments.

NFTs can be valuable in a peer-to-peer digital economy for exchanging services, products, and resources. This would allow individuals to trade fairly without needing a third-party facilitator or costly transaction fees.

Imagine a world where you can find the perfect item to buy or sell without worrying about getting scammed.

Another use case for NFT is in digital asset management. By issuing an NFT token, anyone can track ownership and control of a digital asset securely over time. This would provide better transparency, accountability, and security for digital assets.

The fact that so many NFT collections go live without any utility indicates that the market has a problem. Whether this lack of utility is due to immaturity, we must find ways to improve the NFT market.

We need more use cases for NFTs that will put them to work and bring real value to users. This could include games, collecting cards, online auctions, and digital marketplace trading.

The Ongoing Growth of NFT Games

The most popular form of NFT utility is its application to the blockchain gaming world. With NFT games’ long-term popularity development, there’s no better time to try them.

Developers use blockchain’s distributed public ledger to create digital collectibles and game worlds.

The fact that the recent bear market has hit the blockchain gaming niche had repercussions on NFTs. If you look at the matter from this point of view, the NFT crisis is not at all surprising.

Waiting for the Metaverse Boom

We must also acknowledge that, so far, the metaverse boom has not lived up to its expectations. We must solve many problems before seeing genuine development in the sector.

The success of the metaverse economy and NFTs have a clear interconnection. However, the fact that all the projects invested in the metaverse have suffered during the bear market hurt NFTs.

It is hard to imagine NFT prices steadily growing without a stable, vibrant metaverse market. However, metaverse development is still in its infancy. Therefore it may be a few years before we see its full potential.

Decentralized Finance and NFTs

The same reasoning works for decentralized finance (DeFi). We are witnessing tremendous growth in this sector, yet the NFT market has yet to leverage DeFi’s potential fully.

There is still a lot of room for improvement in terms of integration between DeFi and NFTs. However, by creating new use cases for both technologies, we can boost the NFTs market growth.

Will the NFT Market Recover?

We would be dishonest if we shared a bold answer to this complex and multifaceted question. However, the NFT market is struggling, and we must all work to revive it.

As mentioned above, all the markets connected to NFT technology play a significant role in the health of this ecosystem. NFTs need to find more use cases and be used in practical ways if we are to witness recovery.

It’s fair to assume that if and when the sectors giving value to NFTs recover, the NFT market will follow. We must continue to explore new ways of leveraging this technology to witness a real recovery in the future.

Which Problems Does the NFT Market Need to Solve?

NFT technology still has clear limits and issues that the sector must solve. First, it must resolve the scalability problem to become a viable medium of exchange. However, the transaction speed is typically sluggish, with tremendously high fees, making it a viable tool today.

Second, we need improved data interoperability between NFTs so they can easily interact with each other in valuable ways. Finally, there must be better means of verifying ownership and ensuring the security of digital assets.

The objective is to produce secure, efficient, and cost-effective technology so NFTs can become widespread.

Strategies for Building a Healthy NFT Portfolio

When the NFT bull market resumes, there are a few strategies to help you build a healthy and robust portfolio.

  1. Make sure you diversify broadly. Investing solely in one asset can be risky like any other asset class. Instead, build a portfolio with digital art, collectibles, gaming products, and blockchain-based real estate.
  2. Stay informed. As with any investment opportunity, it’s important to keep up-to-date on market trends and news to make the best decisions. Read blogs and industry reports to keep your finger on the pulse of the NFT space.
  3. Have a game plan. Once you’ve decided which NFTs to invest in, have a clear plan for buying and selling. Don’t forget to set aside some funds for buying low and selling high.
  4. Look for value. Like stocks, the market may have overvalued some NFTs while others represent a great deal. By researching and seeking out NFTs that offer the best value, you’ll have a better chance of seeing investment returns.
  5. Never lose sight of the bigger picture. Investing in NFTs can be exciting, but it’s important to remember that no investment is risk-free. Have a long-term outlook and understand there will be highs and lows along the way.

Final Thoughts – Can Buying NFTs Still Be a Good Idea?

Despite the current state of the NFT market, we must remember this technology still has tremendous potential. Therefore, its current volatility should not deter us. Instead, we can use it to propel digital advancement.

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Aim to buy well-picked NFTs to diversify your portfolio and enjoy potentially long-term rewards. Just remember to stay informed, research thoroughly, and invest responsibly.

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