Virtual Currency Slump Brings 'Cold Wind' to NFT Market... Sharp Decline in Trading Volume
Trading Volume of 45.4 Billion KRW in the Second Week of This Month
Down to One-Tenth Compared to This Year's Peak
[Asia Economy Reporter Lee Jung-yoon] Amid the Luna Classic crisis and inflation concerns, the cryptocurrency market has taken a direct hit, and the trading volume of non-fungible tokens (NFTs) is also showing a declining trend.
According to blockchain specialized media The Block on the 17th, the weekly NFT trading volume from the 6th to the 12th of this month was $35.19 million (approximately 45.4 billion KRW). This is an increase compared to $29.88 million recorded in the previous week from April 30 to May 5, but it has sharply dropped to one-tenth compared to the highest trading volume this year of $369.8 million (approximately 477.3 billion KRW) recorded during April 11 to 17.
The weekly NFT trading volume has been declining since the third week of April this year. It was $238.88 million from April 18 to 24, and decreased to $99.37 million from May 2 to 8. During this period, the NFT market saw a decline in interest, hacking, and fraud, which contributed to the drop in trading volume. On OpenSea, the world's largest NFT trading platform, phishing scams caused damages amounting to about $1.7 million (approximately 2.2 billion KRW). Incidents involving hacking to commit fraud or steal NFTs also emerged.
In this situation, the downturn in the cryptocurrency market accelerated the decrease in trading volume. From April 25 to May 1, NFT trading volume was $193.87 million, but as the price of the representative cryptocurrency Bitcoin fell from the $50,000 range to the $43,000 range, the trading volume halved to $99.37 million from May 2 to 8.
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After the Luna crisis intensified, the trading volume from May 9 to 15 further dropped sharply to $51.46 million. Subsequently, concerns over inflation and the U.S. Federal Reserve's interest rate hikes overlapped, causing the weekly NFT trading volume to continue declining. Facing this downturn, Morgan Stanley analyzed in a report on the 12th of last month (local time) that the NFT market is a sector to be concerned about following the Luna Classic crisis. Morgan Stanley explained, "NFTs and digital land have been targets of speculation and capital inflow," adding, "Most investors purchase these assets with the expectation that other buyers will pay a higher price."
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