Over the past two years, the rise of cryptocurrency and blockchain technology has opened multiple avenues for investors, who have raced to make the most of the profits the new industry was looking to offer.
The NFT Marketplace was one such avenue where investors and creators flocked in droves, pushing the industry to incredible heights in a very short time.
However, NFT activity appears to be running out of steam or at least undergoing a correction. This has forced many blue chip NFT holders, those who would have invested in safer digital assets, to look for other opportunities and alternatives to using their holdings.
According to NFT data aggregator, CryptoSlam, the global sales volume of NFT reached $4.6 billion in January. But it nearly halved to $2.4 billion at the end of March. Several NFT owners have decided to sell their digital items amid this crisis. However, not everyone has lost faith in the sector. Some still feel strongly in favor of NFT, and they’re holding onto their investment — like Bored Ape Yacht Club, which grew 199.6%, according to data from CyptoSlam.
This suggests that there has been an increase in NFT lending. NFT owners seem to want to use their digital items for cash. Experts in the field say they may want to invest that money elsewhere by buying other assets. They also said the addition is the natural course with all the trumps.
Lending NFTs to obtain liquidity and maximize capital efficiency is natural. For example, Arcade NFT specializes in giving homeowners the ability to get loans by pledging their digital collectibles as collateral instead of providing another asset like a house or car.
Experts say the decline in NFT sales volume is likely due to people becoming more aware of what they can do with their NFTs or non-fungible tokens. But this is uncertain as several NFTs bought at incredibly high prices during the market boom are struggling to resell.
NFTs are a form of digital asset that cannot be replicated or duplicated. It can be a digital recording of an image, a video or audio file, or text.