The NFT market has experienced a notable downturn in trading volumes, marking a consistent decline for the third consecutive week in January. According to CryptoSlam.io, a leading on-chain data aggregator, NFT trading sales volume has plummeted to $223 million over the past week, representing a significant 22.5% drop compared to the previous week.
Despite the decrease in trading volume, the NFT sector has seen a surge in active participants, with over 734,000 collectors engaging in NFT purchases across various platforms in the last week. This 34% increase indicates a growing interest in non-fungible tokens, even amidst an overall decrease in trading volume.
However, there has been a noteworthy increase in wash trading, particularly across Solana and Avalanche collections. Wash trading involves simultaneous selling and buying of the same NFT to create misleading, artificial activity in the marketplace. High levels of wash trading on Solana and Avalanche suggest potential artificial inflation of market activity, impacting genuine economic indicators.
Bitcoin Ordinals collections experienced a significant decline in January, with sales dropping by nearly 35%. Ethereum and Solana-based NFTs also saw notable declines. In contrast, Polygon-based NFTs witnessed a substantial 70% increase in sales this month. The Trump Digital Trading Cards Series 2, Polygon’s popular collection, saw a 25% increase in floor price, possibly fueled by excitement around the current U.S. election season and Trump’s campaign.
On the Ethereum front, popular collections like CryptoPunks and Bored Ape Yacht Club (BAYC) saw declines in floor prices, down nearly 8% in the past two weeks. While the market showed significant recovery from its Q4 2023 downtrend, it is now seemingly entering a bearish phase, suggesting a shift in user interest towards less popular networks like Polygon and Avalanche, both of which have experienced remarkable growth. This indicates a potential diversification and evolution of the NFT market rather than a strict contraction.