Could crypto winter spell doom for NFTs?

According to a recent tracking report by DappRadar, OpenSea transactions fell to $9.34m on 28 August from a $2.7bn peak on 1 May. The data also shows that OpenSea users dropped to 22 140 on 5 September from about 60 000 in January.

An OpenSea spokesperson has denied the DappRaddar data, telling Fortune that it compared its record trading day to its lowest, and thus the juxtaposition was misleading.

But what is more worrisome is the broader report by Fortune, which says the trend is likely to continue in the face of a predicted ‘crypto winter’ in the second half of the year – suggesting that the NFT bubble could burst sooner than anticipated. OpenSea’s monthly trading volume from May to July still fell by 62%, Fortune said, citing crypto-tracking platform Dune Analytics.

NFTs gained prominence last year as an avenue for trading art, with musicians and other creators embracing it at the height of the COVID-19 pandemic as traditional revenue streams dwindled.

While NFTs have been touted as the future of the music industry, there is real concern that the bubble may soon burst resulting in a sharp fall in cryptocurrency value.

In April, Nigerian rapper Falz launched an exclusive NFT collection on crypto trading platform Binance. Fellow artists Oxlade, Bnxn and Rema were also due to release their collections.

Meanwhile, Nigerian producer Leriq has revealed plans to launch his NFT platform, African Valuables Collective (AVC), to enable creators on the continent to generate and sell their work.

OpenSea, which is valued at $13.3bn, laid off about 20% of its workforce in July, as the company anticipates instability, according to CEO Devin Finzer.

“The reality is that we have entered an unprecedented combination of crypto winter and broad macroeconomic instability, and we need to prepare the company for the possibility of a prolonged downturn,” Finzer tweeted.