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- The average price of NFTs dropped over 60% in April compared to February highs.
- Experts say declining sale prices are not a bad sign for the overall NFT market.
- Other crypto-art investors question whether the market is in a bubble.
- See more stories on Insider's business page.
The average sale price for crypto art has dropped over 60% from a February high, according to the market research site NonFungible.com.
On Friday, the average price for a non-fungible token or NFT was about $1,549 while average February prices were over $4,000.
Many people in the crypto space have speculated whether NFTs are in a bubble. After selling a crypto-art piece for nearly $70 million, digital artist Mike Winkelmann – also known as Beeple – told Insider he believed NFT prices could be in a precarious position.
Winkelmann, as well as Nifty Gateway co-founders Duncan and Griffin Cock Foster, have compared the recent NFT boom to the dawn of the internet and the bubble that followed.
Noelle Acheson, the managing director of research at CoinDesk, told Insider that interest in crypto art is likely far from over.
"The NFT craze is not so much about prices and quick profit as it is about a new model of creative monetization, a new type of engagement with fans and a new cultural 'experience' for users," Acheson said.
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While the average price of NFTs have fallen from their highest point in February, average crypto art prices have been fluctuating in recent weeks. Between February and the end of March, prices dropped 70% but have since climbed 30% from a low around $1,200 last month.
Melissa Gilmour, the founder of the London-based NFT agency Lily & Piper told CNN the price drop is likely not permanent.
"There are elements of a hype cycle in this one, but we still see it as an immense long-term opportunity," she told CNN.
Still, March's lows were far above where the NFT market was just four months ago. In January, the average price for a crypto art piece was about $195 - the year before it was $30.
Acheson told Insider prices evening out could actually be a good sign for the longevity of the NFT market.
"Just because something is settling down doesn't mean it's over," Acheson told Insider. "Sale prices may very well continue to go down from these spikes we saw in February, but just look at where the market is from just three or six months ago."
More people appear to have gotten into NFT trading. Data from CoinDesk's Quarterly Review shows that NFT trading volumes rose to 25 times December volumes in March and they don't appear to be slowing down. March sales volumes were up nearly 40% from February on top NFT marketplaces, according to CoinDesk's data.
Acheson said the decrease in the average sale price of NFTs could be attributed to less outlying sales, driving up the overall average.
As NFT sales become more democratized and accessible, average sale prices will likely go down
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Data from NFT-tracking site DappRadar shows the volume and number of users across most popular NFT marketplaces is continuing to go up. Data from theblockcrypto.com shows the weekly number of NFT transactions are near February levels, with thousands of buyers and sellers trading every day across top platforms like NBA Top Shot and Sorare.
While mainstream sites like NBA Top Shots - a platform that recently received a $2 billion valuation from DappRadar - have largely driven sales volume, more accessible marketplaces like OpenSea and Rarible have become increasingly popular in recent months.
Investors have also turned their interest toward less curated sites like OpenSea, Rarible, and Mintable. In March, OpenSea received $23 million in funding from investors like billionaire Mark Cuban. Other platforms like Topps have already begun planning to launch an IPO.
More celebrities have also gotten into selling their own NFTs since February sales caught the national spotlight. In March alone, The Weeknd, Snoop Dogg, Halsey, and Shawn Mendes started selling their own digital art pieces on curated sites like Nifty Gateway, SuperRare, and Crypto.com.
While artists like Grimes and DJ 3LAU have had jaw-dropping sales, other artists have had less success.
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Grimes showed the music industry how lucrative NFTs can be when she sold her collection for $5.8 million in under 20 minutes. In March, Shawn Mendes' NFTs averaged only a couple thousand dollars a piece. The same month Halsey's highest selling NFT was about $7,000, while others sold for under a grand.
Artists like 3LAU and producer RAC attribute their success to their history in the crypto world. While the world of NFTs continues to expand, the average price of the digital art pieces may also continue to drop.
As new buyers enter the space drawn in by big names, SNL skits, and flashy sales, they might be more inclined to invest more conservatively in NFTs. Music industry expert Cherie Hu told Insider newcomers to crypto investing will have more difficulty identifying valuable NFTs and will likely be less willing to spend large amounts of money on crypto-art drops.
"In most cases, it's not your typical fan making these kinds of big purchases," Hu told Insider. "Artists like 3LAU have built up a network of buyers in the crypto space."
Furthermore, NFT creators that are new to the space may need more time to build up their credibility in the crypto world.
"[Investing in crypto art] is for people who are looking to take some risks," Winkelmann said in an interview with The New York Times'. "Just making an NFT does not give it any value."
Much like the internet bubble, NFT creators like Winkelmann and buyers such as NFT investor Pablo Rodriguez-Fraile believe that NFT prices will eventually drop, but the phenomenon of NFTs as viable investments will not go away.
"When the [internet] bubble burst, it didn't wipe out the internet," Winkelmann told The Times. "It wiped out the crap."