Daily trading volume plunges over 90% from its peak? Is the NFT market entering a bubble phase?

In recent days, exchanges such as Binance and FTX have all recognized the business opportunities in the NFT trading market and have announced the launch of NFT trading markets one after another. However, a recent report has pointed out that the trading volume of NFTs has plummeted by over 90% from its peak, claiming that the bubble has burst. But is this really the case?

NFT Bubble Burst

According to a recent report by protos.com, the trading volume in the NFT (Non-Fungible Token) space peaked on May 3rd, with a total sales volume of $102 million within a day, largely driven by digital collectibles. The significant demand for transactions led to more exchanges introducing NFT trading features. However, with the recent pullback in the cryptocurrency market over the past few weeks, the overall trading volume in the NFT market has also plummeted.

Data from nonfungible.com shows that the total NFT trading volume over the past week was only $14 million, with an average daily volume of $2 million, marking a 98% drop compared to the peak on May 3rd.

On the other hand, data from Dapprader also indicates a significant decline in the trading volumes of the top five NFT trading platforms compared to the previous month, except for Axie Infinity.

The number of active NFT wallets also seems to have significantly decreased over the past month. Data from nonfungible.com shows that the number of active wallet addresses dropped from 14,878 per week to 11,051, about a 25% loss.

Protos.com stated in the report that the NFT bubble had burst in May:

"Considering all factors, data indicates that the NFT bubble only lasted for four months and burst around May."

Data May Be Sensationalized

While the data above suggests a downturn in the NFT market, can we interpret it as the bursting of the NFT market bubble? We believe that the argument made by protos.com, using the 90% drop in trading volume as the basis for the NFT bubble, is not neutral and may be sensationalized.

When we look at the data of NFT daily trading volume over a longer period, we find that the volume on May 3rd was an extreme value, which could be a result of a special event or abnormal data source. Therefore, using this as the basis for the NFT bubble does not have sufficient credibility and persuasiveness.