By George Ward
The first NFT-based exchange-traded fund (ETF) will wind down at the end of February as the crypto market downturn continues to impact digital assets and their products. Launched in 2021, the NFT ETF is set to liquidate its assets by mid-February.
Failing To Make The Mark
According to a press release by Defiance Digital, the developer of the NFT ETF, liquidation of the portfolio assets for the product will begin in the middle of the month. The fund, launched in 2021, came with much promise for the NFT ecosystem as developers see it as a step in the right direction for the digital collectible market.
According to the fund’s CEO, Sylvia Jablonski, the company has decided to shut down the ETF as it failed to attract assets. However, the move comes amidst a glimmer of hope for the crypto market following a decent uptrend in the prices of digital assets last month.
Similarly, the NFT sales volume also saw an uptick last month, with a 13% rise to break the eight-month decline. According to market observers, the slight rise in the prices of digital collectibles is attributed to the unveiling of new products for the market by some of the major firms in the sector.
Meanwhile, the digital asset-based trading funds are reported to comprise the top 14 equity ETFs in the year’s first month. The recent market sentiments for NFTs indicate optimism despite the tumultuous market situation for most of last year.
Per a recent Bloomberg report on the state of the NFT market in 2022, the sector’s trading volume tumbled 97% from its peak in January 2022. However, the decline in sales volume for digital collections is part of a broader crypto market correction that has wiped out about $2 trillion from the industry.
Aggressive monetary tightening by the US Federal Reserve starved the virtual asset space of investment inflows.
A Glimmer Of Hope
Despite the adverse outcomes of last year, NFT sales volume has been on an uptrend since last month, closely matching its 2021 boom, according to DappRadar data. The data revealed that a solid start to 2022 has helped stabilize the NFT market despite the broader crypto industry outlook for most of the year.
As a result, NFT sales closed the year at a high. Data from DappRadar shows that the NFT sales volume was about $24.7 billion across several blockchain networks in 2022. This indicates a slight dip from the $25.1 billion recorded in 2021, a peak period for the NFT market.
Meanwhile, the DappRadar data did not include transactions that might be wash trading or manipulated trades. NFT trading volume may have been flat last year thanks to the crypto market downturn, but the sector still recorded about 101 million NFT trades throughout 2022.