Non-fungible token (NFT) sales in July on secondary markets fell 25% from June to US$650 million, the second month in a row under US$1 billion, according to data from NFT aggregation site CryptoSlam, and reflecting a broader crypto slump.

Sales had peaked in January at US$4.7 billion, with more than 1 million unique buyers in the market. 

“The current [crypto] market right now is in a bear market,” Anndy Lian, blockchain author and entrepreneur and founding member of NFT creator studio Influxo, told Forkast in an interview. “So [NFT] sales actually reflect very much on how the market is reacting.” 

Yehudah Petscher, NFT relations strategist for CryptoSlam, said he thinks the market has yet to find the bottom. 

“I don’t know if we’ll find the bottom this year,” he said in a Forkast interview. “I believe this bear market we’re in could extend for multiple years.”

However, he did find some optimism in the number of unique buyers in the market, pointing out buyers fell just 7% month-on-month in July to 532,000, which remains higher than in the same month last year.

This shows, Petscher says, that while total sales in U.S. dollars are down, the number of transactions make for a slightly more optimistic outlook.

“NFTs are in rough place right now, but I still think in a very healthy place as far as growth [or] as far as transactions [are concerned],” Petscher said.

Merge and more

The so-called “Merge” for Ethereum could also give the NFT market a shot in the arm, as the leading blockchain for NFTs is slated to move to a proof-of-stake (PoS) network in coming months.

The move to PoS will reportedly reduce the energy used in the Ethereum network by up to 99%, blunting environmental criticism of how the network operates.

“I think [the Merge] will create another spur of hype among the Ethereum fan base,” Lian said, but warning that transaction fees — another common criticism of the Ethereum network — will likely remain high.

NFT and crypto markets now seem to be largely correlated, despite expectations during the NFT boom of late 2021 and early 2022 that they would be inversely correlated. The view then was investors would be less willing to buy NFTs when the crypto they were denominated in was gaining in U.S. dollar terms.

“But they [now] seem to be in lockstep,” Petscher said. “When crypto is down, NFTs seem to be down. Now, I don’t know exactly why it’s playing out that way and why it doesn’t mirror what we thought, but they’re attached at the hip.”

Rather than falling crypto values driving the price of NFTs up to compensate, the overall negativity in the market is driving prices lower to attract what buyers are there, Petscher said. 

“There’s not a lot of liquidity and people are worried that there’s not going to be buyers when they’re looking to sell, so it is a race to the bottom,” Petscher said. “We can see that with prices across the board.”

Apes (still) rule

Projects from Yuga Labs continued to dominate the top of the bestseller list in July, with Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC) and CryptoPunks all in the top five. 

Otherdeed — the plots of land to the upcoming BAYC metaverse project “Otherside” — ranked in fourth position for the month with over US$30 million worth of transactions.

This made the project the seventh to reach the US$1 billion in total sales mark, despite it only launching in May.

With over US$30 million in secondary sales in July, soccer-based collection Sorare came in third on CryptoSlam’s list. Sorare allows people to buy and sell players as part of a global fantasy football competition as another way to interact with the world’s game. 

Petscher told Forkast that he expects sports to be a real growth area, as these tokens typically bring with them increased utility. 

An example is the WAGMI United token released by U.K. minor division soccer club Crawley Town FC, which gives fans the opportunity to vote and participate in team decisions through ownership of the digital token.

Another growth area is art, Petscher says, who sees attention beginning to move away from NFTs as simply profile pictures to more fully fledged pieces of art as more creators move into the space. 

“It’s just the tip of the iceberg,” Petscher said. “Art [NFTs] are just starting, it’s here in a big way and it will just keep growing.”