The non-fungible token (NFT) market has shown initial signs of recovery after a cryptocurrency market crash on Friday led to an evaporation of approximately $1.2 billion in market value.
According to CoinGecko, the total valuation of the sector dropped from $6.2 billion on Friday to $5 billion on Saturday. The market capitalization of digital collectibles across all blockchain networks decreased by nearly 20%, amounting to about $1.2 billion.
As the cryptocurrency market rebounded, the sector quickly recovered. By Sunday, the NFT market cap rose to $5.5 billion, reflecting a 10% increase since the crash. As of the time of writing, the total market cap is close to $5.4 billion.
This round of sell-off highlights the NFT sector's high sensitivity to the overall volatility of the cryptocurrency market. The market plummeted sharply on Friday, causing NFT floor prices to drop simultaneously, leading to a liquidity crunch and a decline in speculative demand.
Despite some market recovery, many leading NFT collections are still experiencing declines over the seven-day and thirty-day periods.
Top Ethereum projects like Bored Ape Yacht Club (BAYC) and Pudgy Penguins fell by 10.2% and 21.4%, respectively, over the past week. Collections such as Infinex Patrons and Fidenza, created by Tyler Hobbs, recorded double-digit declines in monthly performance.
CryptoPunks, the highest market cap NFT collection, saw a weekly drop of 8% and a nearly 5% decline over thirty days.
While most of the top ten NFTs are still down, some collections have shown slight rebounds in the 24-hour period. For instance, Hyperliquid's Hypurr NFT rose by 2.8% in the past 24 hours, and the Mutant Ape Yacht Club (MAYC) collection increased by 1.5%.
These slight recoveries indicate that despite the crash, some buyers may be selectively returning to the market.
According to former U.S. President Trump, Bitcoin plummeted to $102,000 in Binance perpetual contract trading on Friday, coinciding with China's attempts to restrict rare earth mineral exports.
As the market crashed, the sector experienced a liquidation scale of up to $20 billion, surpassing previous cryptocurrency market crises, including the FTX collapse.
CoinGecko data shows that the overall cryptocurrency market cap fell from $4.24 trillion on Friday to $3.78 trillion by Sunday, with approximately $460 billion evaporating over two days.
By Monday, the market recovered to $4 trillion. As of the time of writing, the total cryptocurrency market cap stands at $3.94 trillion.
Despite the market crash, cryptocurrency investment products continue to attract billions of dollars in inflows.
On Monday, CoinShares reported that last week, cryptocurrency exchange-traded products (ETPs) recorded an inflow of $3.17 billion during the flash crash on Friday, demonstrating the resilience of funds amid market panic triggered by liquidations and sell-offs.
Related: U.S. Bitcoin (BTC) and Ethereum (ETH) ETFs rebound as Powell signals rate cuts
Original article: “NFT Market Strongly Rebounds After $1.2 Billion Wipeout from Crypto Crash”
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