Despite the broader crypto market showing signs of a potential bull-market phase, the non-fungible token (NFT) sector, led by notable collections such as CryptoPunks and Bored Apes, is experiencing a contrasting trend.
The Nansen NFT-500 index, which assesses the valuation of the top 500 NFTs, has witnessed a 50% decline year-to-date when measured in Ether (ETH) and a 16% drop in US dollar terms.
In the same vein, the Blue-Chip 10 index, focusing on the most popular NFT collections including CryptoPunks and the Bored Ape Yacht Club (BAYC), has seen a 44% decrease in ETH terms and a 1.7% drop in USD. This indicates a downturn in the valuation of high-profile NFTs despite the overall crypto market showing positive momentum.
Negative correlation between NFT and ETH prices
Nick Ruck, Chief Operating Officer of ContentFi, provided insights to CoinDesk on Thursday, attributing the subdued performance of the NFT market to a negative correlation between NFT prices and the price of Ether (ETH). Unlike popular decentralized finance (DeFi) protocols such as Uniswap, NFTs have not experienced a new technological breakthrough or significant surge in user interest, despite surviving their initial market cycle.
While the NFT market, as reflected in indices like the Nansen NFT-500 and the Blue-Chip 10, has seen a downturn, there are indications of growth in specific segments. Notably, NFTs based on utility in gaming, as opposed to simple digital images, are showing promise. Additionally, the Bitcoin Ordinals space is exhibiting signs of development within the broader NFT landscape.
Nick Ruck emphasized the impact of Bitcoin Ordinals, characterizing it not only as a breakthrough for enhancing Bitcoin’s utility but also as a central hub fostering community unity. Ruck highlighted the current trend of entities from beyond the traditional crypto sector actively seeking ways to engage with and participate in the Bitcoin Ordinals phenomenon.
In his statement, Ruck conveyed that there is a widespread convergence of interests, where diverse entities have identified a common ground and express a collective desire to be part of the Bitcoin Ordinals craze.