The non-fungible token (NFT) market has witnessed an abrupt end to its brief recovery period, shedding over $1.2 billion in value within a single week.
Following a substantial 40% surge since mid-July, recent data from NFT Price Floor revealed that the aggregate valuation of NFT collections plummeted to $8.1 billion, marking a 12% decrease from the August 13th peak of $9.3 billion.
The $1.2 billion NFT market decline occurred alongside a 9.63% pullback in Ether prices.
Current TradingView data indicates ETH is trading at $4,275.52, retreating from Wednesday’s high of $4,788.
CryptoPunks Bleeds $300M as Ethereum’s 9% Drop Triggers NFT Market Decline
Given that numerous NFTs are built on the Ethereum blockchain, with valuations and transactions priced in ETH, positive or negative price movements in the crypto typically drive corresponding shifts in NFT sector performance.
As ETH declined 6.27% over the past 24 hours, most of the leading 10 collections experienced similar downward pressure.
Top 10 NFT Collections/ Source: Coingecko
CryptoPunks, which remains the highest-valued NFT collection, saw roughly $300 million erased from its market capitalization.
Current data shows the collection valued at $2.1 billion, representing a 9.8% drop from its $2.4 billion market cap five days prior.
During late July, major investors were actively accumulating CryptoPunks assets. One prominent whale allocated 2,082 ETH (approximately $5.87 million) to acquire 45 CryptoPunk NFTs within a matter of hours.
However, market sentiment has cooled considerably.
The Bored Ape Yacht Club (BAYC), previously holding the second position in NFT market capitalization rankings, fell to third place on Monday.
The collection’s value dropped to $477.6 million, representing a nearly 16% decline from its valuation of $602 million on Wednesday.
Conversely, Pudgy Penguins advanced to the second-highest valuation despite losing approximately $100 million in total value.
Source: NFTFloor
On August 18, the collection’s market cap stood at $490.6 million, down 14.3% from Wednesday’s $591 million.
Following Pudgy Penguins token (PENGU)’s remarkable 433% rally in July, established corporations began recognizing blue-chip NFT collections as viable assets for treasury diversification strategies.
Last week, publicly traded blockchain firm BTCS Inc. disclosed its acquisition of three Pudgy Penguins NFTs for its corporate digital asset holdings.
Additionally, asset management company Canary Capital recently submitted an S-1 registration statement to the U.S. Securities and Exchange Commission for a proposed ETF designed to invest in the $PENGU meme coin and Pudgy Penguins NFT.
If granted approval, this would mark the first U.S. ETF to hold NFTs directly.
“Digital Trash”: Solana Co-Founder Slams NFTs as Valueless Hype
This institutional adoption has contributed to growth in NFT wallet adoption.
NFTPulse data indicates that active NFT users across blockchains nearly doubled since early 2024, rising from 126,390 in March to over 641,000 in June, though declining to approximately 328,600 in August.
While Solana initially dominated activity, Base now commands more than 50% of total transaction volume.
Source: NFTpulse
However, persistent criticism continues to overshadow the NFT sector.
Among the most outspoken critics is Solana co-founder Anatoly Yakovenko, who characterized NFTs and meme coins as “digital trash”, essentially assets lacking genuine value.
Sunil Raina, CEO of Cerebree, recently informed CryptoNews that the majority of NFTs remain without utility, stating: “They were created without intrinsic value, legal rights, or lasting utility. These assets are speculation-first products.”
Raina further described NFTs as predominantly ‘digital receipts’ whose valuations are primarily driven by hype cycles, influencer promotion, and viral trends rather than technological fundamentals.
Nevertheless, Maria Carola, CEO of StealthEx, acknowledges that Yakovenko’s ‘digital trash’ criticism may apply to superficial, hype-driven releases.
However, she argues that genuine NFT demand exists and validates their market presence, even if they function merely as limited-edition digital collectibles.
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