Is Bybit’s Exit a Sign of Trouble for NFT Marketplaces?

Bybit, one of the top cryptocurrency exchanges, has revealed that it will be shutting down its NFT Marketplace, Inscription Marketplace, and IDO product pages as part of a larger campaign to simplify its features. The site will become unavailable by April 8, and customers have been instructed to settle their assets before the cut-off date.

The announcement, which came on April 1, is yet another high-profile departure from the NFT market as companies continue to leave the once-bustling digital asset space. The exit also comes after the collapse of a massive $1.4 billion hack that affected Bybit in February, a heist that the FBI linked to North Korea.

Mass Exodus from the NFT Market

Bybit isn’t the only one to shut down its NFT business. Other large crypto companies have withdrawn from the area in recent weeks due to sagging trading volume and market saturation. Earlier this week, X2Y2, a top NFT exchange, said that it would discontinue its activities after handling $5.6 billion in trading volume since launching.

In a statement, X2Y2 referenced a 90% drop in trading volume of NFTs since its high in 2021 as a key reason for the closure. “Marketplaces live or die on network effects. We battled tooth and nail to be #1, but after three years, it’s clear it’s time to move on,” the company said. X2Y2 further mentioned that it is turning to artificial intelligence (AI) as its new focus.

In like manner, Kraken closed down its NFT marketplace on February 27 due to a resource realignment towards “new products and services.” RTFKT, meanwhile, closed shop in January, following sharp drops in the value of its NFT collections. Even giant electronics manufacturer LG is set to shut down its NFT platform, LG Art Lab, on June 17, citing that it’s “the right time to shift our focus and explore new opportunities.”

The Decline of the NFT Market

Having once been hailed as a revolutionary step in digital ownership and art, the NFT market has been unable to bounce back from the extended crypto winter. Floor prices of some of the highest-profile NFT collections have crashed.

For example, CryptoPunks, one of the oldest and most popular NFT collections, currently sells at a floor price of 42.59 ETH, down almost 66% from its high in August 2021 of 125 ETH. The Bored Ape Yacht Club (BAYC) has fared even worse, with floor prices falling 90% from 153.7 ETH in May 2022 to a mere 15.35 ETH today.

What’s Next for Bybit and the NFT Industry?

Bybit’s withdrawal from the NFT market is an indicator of a wider trend in the crypto sector as companies rethink their approach amid market volatility. With waning interest and falling asset prices, companies are redirecting attention to AI, DeFi, and other new technologies.

As the NFT market continues to decline, industry commentators will be closely observing to determine if any emerging use cases or technological advancements can stoke demand for digital collectibles. For now, though, the wholesale abandonment by major players indicates that the NFT hype cycle is probably reaching its terminus.

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