OpenSea Daily Trading Volume Declines 67% From August Peak
Daily trading volume on OpenSea, the largest marketplace for non-fungible tokens (NFTs), has slowed down sharply. While daily volume was north of $320 million at its peak in late August, it fell to around $100 million by September 7 – representing a 67% decline.
Interestingly, the decline in trading volume for NFTs coincides with a mild sell-off in the crypto market, particularly in Bitcoin and Ethereum. According to Glassnode, miners have started selling a portion of their BTC balance in an attempt to lock in profits. Last week alone, miners spent 2,900 BTC, worth over $140 million.
A Recap of The Recent NFT Mania
The market for NFTs witnessed a renewed surge in activity in late July. As a testament to this, the biggest marketplace, OpenSea, processed $95 million worth of transactions in just two days. The marketplace also surpassed $1 billion in gross market volume by early August.
On August 23, Visa announced that it had acquired a CryptoPunk for 49.5 Ether – equivalent to around $170,000 at today’s prices. The news spurred a surge in demand for CryptoPunks, resulting in the exchange of $20 million worth of Punks in just one hour.
By the end of the month, OpenSea reported over $3 billion in trading volume for the first time ever. The company also reported over $322 million in daily volume on August 29, recording yet another milestone.
It is worth mentioning that during the last few days of August, several hyped projects like Mutant Apes Yacht Club launched and caused a massive uptick in volumes.
NFT Hype Could Be Cooling Off
Daily transactions on OpenSea have cooled down as well. At its peak during August, around 80,000 transactions were taking place every day. However, that figure has now declined to around 55,000, representing a 31% drop in daily transactions.
Following the path of OpenSea Ethereum—NFTs on the Ethereum blockchain—the daily trading volume of OpenSea Polygon has also declined. Daily volume was around $2.7 million on OpenSea Polygon at its peak on August 24. Though, that figure has dropped to around half a million by September 6.
Coinciding with this decline in activities for NFTs, the crypto market was also experiencing a mild retraction. However, yesterday, on September 7, the market experienced a flash crash as BTC and ETH plummeted by double-digit percentages in a matter of hours.
Bitcoin, which was trading at around $53,000, moved downwards to $42,000. Ethereum also plunged to around $3,000 from highs around $4,000. Nevertheless, BTC and ETH eventually bounced back to around $47,000 and $3,500, respectively.
It is worth mentioning that Solana is one of the few digital assets that is making gains during the current market sell-off. Known for its speed and functionality that make it a potential “Ethereum killer,” Solana increased by nearly 300% in August alone, outperforming Ethereum by over 500%.
Buterin Suggests Moving NFTs onto Layer-2 to Reduce Gas Fees
Despite the EIP-1559 update being live, Ethereum gas fees spike at times of high network congestion. Recently, driven by the NFT frenzy, Ethereum gas fees have surged to high levels. On September 3, transactions on Uniswap cost an average of $500, making it extremely costly for users.
While the Ethereum gas fee issue won’t be entirely resolved until the network transitions to the PoS mechanism, Vitalik Buterin has suggested moving NFTs onto Layer 2 to reduce gas fees. Buterin proposed a solution for making NFTs cross-rollup friendly, which would then allow NFTs to move to Layer 2.
Do you think the NFT bubble has burst? Let us know in the comments below.