NFT Marketplaces Shut Down Amid Declining Volumes

Since yesterday, two major firms — X2Y2 and crypto exchange Bybit — have announced the closure of their NFT marketplaces.

X2Y2, the fourth-largest NFT marketplace by trading volume, per Token Terminal data, will sunset its business on April 30, according to a blog post yesterday, March 31, from the firm’s founder and CEO.

The news comes over three years after the marketplace launched in February 2022.

Today, April 1, Bybit — the second largest centralized crypto exchange by 24-hour volumes — also announced that it would be shutting down its own NFT marketplace, as well as its inscription marketplace for Bitcoin-based NFTs. The exchange giant cited the reason for the shut downs as “part of our efforts to streamline our offerings,” providing no other context. The firm noted that the marketplaces would cease operations on April 8.

X2Y2, on the other hand, stated explicitly that the decision to shutter its NFT business stems from the decline in the NFT markets. Per the announcement, total NFT trading volumes have shrunk by 90% from their peak in 2021, as the demand for NFTs has steadily declined over time.

At the height of the NFT mania in 2021, X2Y2 ranked second place in trading volumes, behind OpenSea, and the marketplace generated an all-time total trading volume of $5.6 billion. By comparison, however, OpenSea — which is currently ranked second by trading volume on Token Terminal — has an all-time volume of $36.4 billion.

However, amid the general declining interest in NFT trading since its peak, X2Y2’s numbers have since dwindled, with the marketplace seeing just $53.5 million in trading volumes over the last year, per Token Terminal data.

This is due to the steady fall in demand for NFT trading, even this year alone, with the daily trading volumes of the top 20 NFT marketplaces declining over 90%, from $62.13 million at the end of January to $5.35 million as of yesterday, March 31.

In comments to The Defiant on the current state of the NFT market, Harrison Seletsky, director of business development at digital identity platform SPACE ID, stated:

"NFTs — like any high-risk digital asset—mostly live and die by hype, speculation, and the willingness of investors to try and chase the next big thing. Are they dead? Not entirely. But for most, the glory days are long gone, and the future belongs to whatever catches the crowd’s attention next, or whatever they deem as an interesting vehicle for speculation."

Harrison Seletsky

Despite the decline in demand for NFTs, the top two NFT marketplaces, Blur and OpenSea, have maintained relatively high trading volumes in the last year, generating $3 billion and $1.2 billion respectively. Meanwhile, Immutabe, X2Y2, and NFTX, the remaining platforms in the top five, generated $393.6 million, $53.5 million and $30.5 million respectively.

According to yesterday’s post from X2Y2’s founder, TP, the firm plans to pivot to artificial intelligence, hinting that the team is working on a new product in the fast-growing crypto-AI space. TP called AI “hands down the biggest paradigm shift we'll see in our lifetimes.”