The NFT market faces an imbalance in April, with sellers consistently outnumbering buyers, raising concerns about its stability.
April has been marked by a growing imbalance in the nonfungible token (NFT) market, as sellers continuously outnumber buyers, causing concern for individuals planning to sell their NFTs in the near future. Data extracted from NFTGo, an analytics platform, highlights the widening gap between those seeking to buy and those aiming to sell in the NFT market.
On April 26, the data showed 7,907 buyers, while 8,641 sellers attempted to trade their NFTs. A troubling low was reached on April 19, with a mere 5,893 buyers, only slightly higher than the lowest point in the past year on June 18, 2022, with 5,343 buyers.
Even on April 5, when buyer numbers peaked at 18,495, the market was still saturated with 36,423 sellers. The last occasion when buyers exceeded sellers was on March 11, tallying 9,756 buyers to 9,754 sellers. This unrelenting lack of demand throughout April raises red flags regarding the stability of the NFT market.
NFT Market’s Imbalance Sparks Community Concern and Speculation
The precarious market conditions have incited mixed reactions from the community, especially on social media platforms like Twitter. Ovie Faruq, the co-founder of Canary Labs, shared on April 26 that the NFT market is currently “not functioning.” Such sentiments underline the increasing anxiety among those involved in the market.
For the last year, daily NFT traders ranged from 20-60k.
In the last few days it dropped to 7k
This market is not functioning atm. pic.twitter.com/akqKuWHmxr
— Mando (@rektmando) April 26, 2023
Several factors may have contributed to the downturn in the NFT market, including the collapse of Silicon Valley Bank on March 12. This event instilled fear among traders, leading to a subsequent decline in NFT trading volumes. Before the bank’s failure, trading volumes fluctuated between $68 million and $74 million on March 10. However, volumes took a nosedive to $36 million on March 12 following the collapse.
Moreover, the NFT market saw a 27.9% drop in daily sales count between March 9 and March 11. Since then, the market has grappled with recovery, as sellers have consistently outpaced buyers throughout April. This could be attributed to the recent demand for meme-influenced coins.
ETH volatility, alt-coins pumping, all this has never been good for NFTs in the past.
The decline in floor prices we see in almost all projects right now is partly due to that.
— wale.swoosh 🐳 (@waleswoosh) April 18, 2023
Another potential contributing factor to the NFT market’s imbalance is the phenomenon of wash trading. A CoinGecko report released on March 20 stated that the top six NFT marketplaces observed an uptick in wash trading for the fourth month in a row in February, amassing a volume of $580 million.
The report disclosed a remarkable 126% surge from January’s volume of $250 million. It attributed the overall rebound of the NFT marketplace as the driving force behind this increase. However, the sustained prevalence of wash trading may also play a role in the market’s ongoing imbalance.