February was a difficult month for the non-fungible token (NFT) market, with trading volume dropping more than 63% compared to December 2024. According to DappRadar analysts, this decline coincided with a broader crypto market correction and waning interest in speculative trading of digital assets.
Sharp Decline After a Booming December
According to the report, the total NFT trading volume reached $1.36 billion in December but then fell 26% in January and dropped another 50% in February. Analyst Sara Gherghelas noted that this reflects the correlation between the crypto market and NFT sector activity.
"NFTs showed signs of returning to the market, but their momentum has weakened since the beginning of the year," Gherghelas explained.
According to CoinMarketCap, in December 2024, the total cryptocurrency market capitalization hit a record $3.71 trillion, with many crypto assets experiencing significant growth. For instance, Bitcoin (BTC) reached an all-time high of over $108,000 on December 17 and later surpassed $109,000 in January, just days before Donald Trump’s (Donald Trump) presidential inauguration.
However, by February, the market had lost a significant portion (-85%) of these gains. Trump's new tariff restrictions placed additional pressure on the economy, further increasing macroeconomic uncertainty.
User Activity on NFT Platforms Increases Despite Trading Decline
Despite the drop in NFT trading volume, interest in the sector remains, according to analysts. DappRadar recorded a 6% increase in user activity in February, despite the broader downturn. This month, 3.5 million users engaged with NFT platforms.
One of the key drivers of continued interest has been the rise of AI-generated NFTs. In late January, 0G Labs announced ERC-7857, a new NFT standard specifically designed for artificial intelligence.
"The integration of artificial intelligence into NFT projects signals a shift toward more dynamic and interactive digital assets," Gherghelas stated.
She believes that while speculative interest in NFTs may be declining, assets with real utility will continue shaping Web3 trends.
Which NFT Segments Are Holding Their Ground?
Despite the drop in trading volumes, certain NFT categories continue to attract users:
- Avatar and PFP (profile picture) NFTs remain the most popular category, with a $243 million trading volume and 76,385 sales.
- Gaming NFTs ranked second, generating $41 million in trading volume across 421,853 transactions.
- Sports NFTs led in transaction count, with 659,097 sales and a total volume of $7.7 million.
How the NFT Market Has Changed Over the Years and What’s Next
The NFT market has been in decline since 2022, when it peaked with a trading volume of $57.2 billion and 121.7 million transactions.
In 2024, the sector experienced its worst period since 2020. The total NFT trading volume fell to $13.7 billion, and the number of transactions dropped below 50 million.
Current trends indicate that the NFT market is evolving. Investors are increasingly moving away from "useless" meme coins and shifting toward more functional digital assets. As a result, analysts at Bernstein expect capital inflows into DeFi and NFT markets.
Experts believe that while declining trading volumes do not signify the end of the NFT market, they do indicate an ongoing transformation of the industry.
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