Prominent investor Gary Vaynerchuk, who shot to fame following his immense support of NFTs, shared his thoughts on the NFT market on 11 December. According to him, the NFT sector is going through a downturn with falling prices and declining popularity. 

What are the core issues plaguing the NFT market?

According to a blog post published on his website, Vaynerchuk attributed the NFT market’s current predicament to three core issues: Oversupply, short-term greed, and inferior operators.  

Expanding on oversupply, he stated there were simply too many NFT projects. The hype around digital art, paired with endorsements from celebrities and influencers, prompted the launch of too many NFT projects. The problem was simple: there just wasn’t sufficient demand. 

This particularly resonated with the NFT boom of 2021, which saw a number of celebrities launching NFTs. The crypto bull run only made it more appealing.

Interestingly, Gary Vaynerchuk had stated back in November 2021,

“98-99% of NFT projects from this ‘2021 NFT Year’ will end up being bad investments.”

Short-term greed and shady projects

Vaynerchuk likened the 2021 NFT boom to the internet stock boom and the subsequent dotcom bubble crash in 2000. According to him, investors were viewing the technology as a source of exponential returns. This led to investments without due diligence and thoughtfulness. Bad actors exploited this by setting up scam projects aimed at fleecing investors. 

Quality was not the only concern here. The quantity too stood as a perturbing aspect of the NFT market. According to Gary Vaynerchuk, anyone can launch an NFT project. Easy access has effectively made way for poor NFT projects with no demand. 

A look at what’s to come

Several metrics painted a bearish picture for NFTs. This included declining sales volumes, floor prices at record lows, and a general hesitancy from investors to put money into projects. 

Data from Cryptoslam showed that NFT trading volume across all sectors took a 60% hit this year. Cryptopunks and Art Gobblers, two famous projects, have seen declines of 21% and 95% respectively over the last month. 

While this downturn may discourage retail investors, corporate interest in NFTs stood at an all-time high. According to United States Patent and Trademark Office Attorney Mike Kondoudis, there have been thrice the amount of trademark applications for NFTs and related blockchain products in 2022 as compared to 2021.