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Non-fungible tokens have entered mainstream consciousness in a big way in 2021. The same market that was the talk of the town in 2021 has seen a shocking downfall, starting in 2022. In this article, we have listed some of the NFT token sectors that have since suffered a brutal downturn.
In an Aug. 29 blog post, Nansen, a popular blockchain data platform, shared an analytical report examining the state of common non-fungible tokens right now compared to last year. The analytics company has categorized the diverse NFT market into different sectors to evaluate the performance of each sector.
As of January 2022, art NFTs are the best performing ETH NFT sector
They’ve outperformed every other type of NFT, including Blue Chips and Metaverse NFTs, remember?
But they have fallen against the dollar…
Let’s see how bad each NFT sector is… pic.twitter.com/ZcZUI2EXDw
— Nansen ???? (@nansen_ai) August 29, 2023
The blockchain data platform has categorized the NFT market into Blue Chips, the broader NFT market, Social, The Metaverse, Art, and Gaming. The NFT index starts with the worst performing sector and then works its way up, assuming an investor has invested $1,000 in each index by January 1, 2022.
1. NFT Gaming
NFT gaming is a sector that represents various gaming NFTs such as GameFi and Play-to-earn. This NFT sector has suffered a brutal downturn in recent months, leaving many investors with massive losses. Of all the NFT sectors, this was the worst performer, with the index falling as much as 91%! If you invested $1,000 in January 2022, it would be worth $90 now.
Source: Nansen.ai, NFT gaming
2. The Metaverse
The Metaverse is another non-fungible token-related sector that has suffered a massive downturn in recent months, with even more pronounced consequence of the lack of activity. The NFT sector includes gaming items and virtual avatars. If you invested $1,000 in January 2022, your NFT investment would now be worth only $202.
Source: Nansen.ai, Metaverse NFTs.
3. Social NFTs
Social NFTs are an industry that focuses on social connection; This can be closed access or certain privileges granted only to holders. Netflix is a perfect example of launching NFTs to gauge audience sentiment on each episode of the third season of Love, Death + Robots by looking at the sales numbers. If you invested $1,000 in this sector in January 2022, you would now have $362.
Source: Nansen.ai, Social NFTs
4. Blue Chip NFTs
Blue chip NFTs are non-fungible tokens that are expected to hold more sustainable long-term value due to historical trading activity and strong fundamentals. Some notable collections include Bored Ape Yacht Club, Mutant Ape Yacht Club, and Azuki NFTs. They may be the leading NFTs now, but even they are lagging behind in the current market. If you invested $1,000 in January 2022, you would now have $405.
Source: Nansen.ai, Blue-chip NFTs
5. Art themed NFTs
This NFT sector ranks first in the top 20 art collections by market capitalization. This index attempts to reflect the wide range of art collections traded in the market. If you invested $1,000 in January 2022, you would now have $596. It is worth noting that the price of Ethereum in USD was much higher in January 2022 than it is today. If you invested $1,000, you would have about $432.
Source: Nansen.ai, Art NFTs
What went wrong?
The 2022 non-fungible token market crash is one of the most talked about topics of the year. The puzzle remains: why did the NFT market crash and how will we recover from a crypto crash that shook the industry?
The NFT market may have crashed in 2022 due to various factors including market saturation, fraud and scams which created fear, doubt and uncertainty in the market. Another factor that may have led to its downfall was the collapse of giant crypto companies.
In May 2022, the Terra crypto coins TerraUSD and LUNA collapsed. The two currencies lost nearly 99% of their value, and investors lost more than $60 million. These two events and similar collapses laid the groundwork for the NFT market crash. The NFT market collapsed again in November following the fallout from the FTX crypto exchange, which saw rock bottom prices protect more than 30% of their value.
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