NFT Market Sees Sharp Decline: What’s Behind the Drop?
The NFT market has experienced a significant downturn, with trading volume sinking for the fifth quarter in a row. According to data from Dappadar, the trading volume plummeted by 80% to $823 million in the second quarter of 2025, compared to the previous year. This sharp decline marks the weakest performance since 2022, when the annual trading volume reached over $50 billion.
Market Trends: A Shift in Focus
Despite the falling trading volumes, the NFT turnover actually increased by 78% this quarter, indicating that prices have dropped significantly while interest remains. The profile image NFTs recorded a significant decline in trading volume, down 72%, while real-world assets rose to second place with a 29% increase in volume. This shift in focus suggests that users are returning to the market with different motivations than in previous cycles.
The number of monthly NFT traders rose by 20% to 668,598, indicating a renewed interest in the market. Domain NFTs experienced growth, driven by activity on blockchain platforms like Telegram, where users buy anonymous number-based domains linked to accounts without SIM cards. Gaming NFTs also dominated the quarterly charts for the first time in years, with Guild of Guardians securing two positions in the top five collections and surpassing blue-chip projects like CryptoPunks and Bored Ape Yacht Club.
Consolidation in the NFT Marketplace
The NFT market has seen a wave of consolidation, with several major players exiting the scene. BYBIT, for example, discontinued its NFT marketplace in April after a security breach by North Korean hackers. Other platforms, like Solsniper and LG Electronics, have also closed their NFT marketplaces, citing a shift in focus towards other areas like trading bots and memecoin tools. This consolidation suggests that the market is maturing and that only the strongest players will survive.
Despite the exits, OpenSea has maintained its market leadership, with strong trading volumes and a significant increase in sales. The upcoming $SEA token airdrop has likely contributed to this growth, as users actively buy cheaper collections to farm points for future rewards. X2Y2, formerly the fourth-largest NFT platform, stopped operations in April, while VK, Russia’s largest social media platform, closed its VK NFT Hub in April due to increasing financial losses.
NFT Lending Market Collapses: A Shift in Utility
The NFT lending market has collapsed, with a 97% decline in value from almost $1 billion to just $50 million. The borrower base has declined by 90%, while the lender base has decreased by 78% since the previous year. The average loan size has also shrunk from $22,000 to $4,000. Gondi has overtaken Blur’s Blend protocol to lead the sector, with 54.2% of the total volume. The collateral preferences have shifted significantly across platforms, with Pudgy Penguins dominating on traditional platforms like NFTFI and Arcade.
The loan duration has tightened to an average of 31 days, indicating a more cautious and tactical approach among borrowers. This collapse suggests that the sector is undergoing a fundamental shift from speculative hype to useful applications, with experienced collectors and DeFi-native users driving the market. As the NFT market continues to evolve, it will be interesting to see how it adapts to these changes and what the future holds for this rapidly changing space.
