NFT Market Faces Sharp Decline as Trading Volumes Drop Over 60%

The non-fungible token (NFT) market has been hit hard in early 2025, with trading volumes plummeting over 60% since December, reflecting the broader downturn in the cryptocurrency market. Despite signs of recovery in late 2024, the momentum seems to have stalled, according to DappRadar analyst Sara Gherghelas, who outlined the sharp decline in a March 6 report.

In December 2024, total NFT trading volume stood at $1.36 billion. However, January saw a 26% month-over-month drop, and February delivered an even steeper 50% decline, wiping out much of the recent progress in the sector.

“While NFTs appeared to be making a comeback, the trend reversed at the beginning of 2025,” Gherghelas noted, attributing the slump to NFTs’ correlation with cryptocurrency prices.

Indeed, the overall crypto market capitalization peaked at $3.71 trillion on December 9, with Bitcoin hitting a record $109,000 on January 20, shortly before Donald Trump’s inauguration. However, February brought uncertainty, as concerns over Trump’s trade tariffs triggered a market-wide selloff, erasing much of the crypto sector’s gains.

Surprising Uptick in NFT User Activity

While trading volumes tumbled, user engagement with NFT platforms actually rose, showing a 6% increase in February with around 3.5 million unique users. DappRadar suggests that this rise was driven by growing interest in AI-powered digital assets, which are reshaping the NFT landscape.

“The increasing integration of artificial intelligence into NFT projects signals a shift toward more dynamic, interactive digital assets with enhanced utility,” Gherghelas explained. She emphasized that NFTs offering real-world applications and deeper engagement will likely drive long-term Web3 adoption, even as speculative trading wanes.

When breaking down NFT sales by category, profile picture NFTs remained the top performer, with $243 million in trading volume spread across 76,385 sales. Gaming NFTs followed, generating $41 million from 421,853 transactions, while sports NFTs saw the highest number of transactions (659,097) but only $7.7 million in volume.

A Market Struggling to Regain Its Peak

Despite short-term fluctuations, the NFT market remains far from its golden era. According to a January DappRadar report, 2024 marked the worst year for NFTs since 2020, with just $13.7 billion in trading volume and under 50 million total sales.

For context, NFTs had their best-ever year in 2022, when mainstream hype drove $57.2 billion in trading volume and 121.7 million sales. Whether the market can reclaim those highs remains uncertain, but the industry’s focus seems to be shifting from hype-driven speculation to long-term utility and engagement.