Two recently-published articles offer a glimpse at two sides of a debate about the health of non-fungible tokens (NFTs) as an asset class.
The first of these pieces, “NFT Sales Are Flatlining”, was published in the Wall Street Journal yesterday. It represents an alarmist take on the health of the marketplace. A response piece published hours later in Cointelegraph offers a more optimistic take with different data.
Both pieces make excellent points about the state of the market, so we wanted to boil their conclusions down for you — the reader:
What does the WSJ’s article say?
Paul Vigna from the Wall Street Journal looks at data from the website NonFungible, which shows that the number of NFT sales are down more than 92% since September 2021. He also points out that the “number of active wallets” are down 88% since November 2021.
Those are hard figures to argue against, assuming that they’re true. Vigna suggests, using anecdotal examples from the Journal, that NFT buyers are becoming NFT bagholders. Wedged between his research are graphs which put into perspective the decline of NFTs in different categories — which again draws on data from NonFungible.com.
In truth, little of Vigna’s piece reads as an editorial or opinion piece. A lot of it is hard facts about the health of the market, and based on how the story ends — where it’s going too. The conclusions? That not all NFT projects will survive and that utility will be king in v2.
How does Cointelegraph respond?
Like we said, the CoinTelegraph piece is a direct response to Vigna’s piece for WSJ. We also said that Vigna’s research would be hard to argue against “assuming that they’re true.”
A healthy portion of Jeese Coghlan’s piece for Cointelegraph is spent refuting the authenticity and completeness of Vigna’s star source: NonFungible.com. Coghlan pulls on data from Dune Analytics instead, which is considered among many crypto natives to be one of the best web3/blockchain-centric data aggregators and analytics platforms.
The Dune query that Coghlan indexes market volume from some of the largest NFT marketplaces across chains. It also looks like the opposite of the WSJ’s graphs. This is reiterated in the article using a tweet from Tom Schmidt, a crypto-facing venture capitalist.
However, Coghlan’s piece offers one concession: indexes created by third-parties which track the top art and gaming NFT collections are down pretty significantly. The flip side of that coin is that many of the “blue chip” collections are up and to the right.
Who’s right?
It’s hard to dispute data because the dots we plot on charts are there for a reason. In this case, it looks like Cointelegraph’s data is more complete than the Wall Street Journal’s. Sure, a healthy portion of the article touched on how some people have been unable to flip or sell their NFTs, but the narrative here appears to support the “up and to the right case” for digital collectables, especially ones which command considerable clout.
We dispatched a request for comment to NonFungible.com to better understand how they track NFT transactions so that we can better understand the disconnect between these two sources. We’ll report any findings in our two cents section in a future issue if they do or don’t respond.