It appears that there may be an inverse correlation between the memecoin market and the NFT market, with the prices of these two types of assets moving inversely.
In particular, the memecoin market could currently be the cause of the strong suffering of the NFT market.
The drop in NFT prices: is the memecoin market to blame?
Comparing the trend of the memecoin market in recent months with that of NFTs, there would actually seem to be an apparent inverse correlation.
Using CryptoSlam’s monthly NFT sales volume chart, you can see that starting from June 2022 there has been a real collapse.
Since then, the lowest point was recorded in September 2023, with only $300 million in monthly trades.
In particular, after a brief and contained peak in December 2023, during 2024 the daily trading volumes of NFTs remained above 25 million until April, and then plummeted between May and June to just over 10 million.
In fact, the monthly trading volume in June that just ended was only 462 million dollars, which is much less than the 1.7 billion in December 2023.
In other words, monthly volumes over the year went from $1.7 billion in December 2023 to $462 million in June 2024, with an almost constant decline of 74%, concentrated mainly in the last two months.
Memecoin Market Pushes NFT Prices Down
Many memecoins, however, performed well in 2024.
Taking as a reference the gains or losses since December 31, 2023 for example Dogecoin is +40%, Shiba Inu +66%, Pepe even +725% and Floki +363%.
Even the new WIF (dogwifhat) recorded a sensational +1,300%, while Bonk stopped at +77%.
These numbers taken together seem to indicate a possible flight of capital from the NFT market to the memecoin market.
However, if we only consider the last 30 days, the inverse correlation does not appear to exist.
The market prices of all six main memecoins lost between 21% and 35% in June, with overall movements that were decidedly similar to each other.
The monthly trading volumes on the NFT market in June decreased by 25% compared to those in May, i.e. with a decline of the same order of magnitude as the prices of memecoins.
Prices and volumes
However, one should not compare prices with volumes, because they are two different things.
However, it is possible that a drop in NFT sales volumes also corresponds to a drop in prices, given that volumes are calculated by multiplying prices by quantities.
So while on the one hand there does not seem to be a direct correlation, the hypothesis circulating is that in the second quarter of the current year, taken as a whole, a wave of new memecoins on VIPs, politics and animals may have taken capital away from the NFT market, and the downturn in the crypto market did the rest.
It should be noted that the overall June volumes of the NFT market were also lower than the monthly minimum peak of 2022, the year of the bear market, and this suggests that there may be some sort of delay between this market and that of memecoins .
For example, the all-time high of the monthly trading volume of NFTs was recorded in January 2022, a good two months after that of the crypto market.
The hypothesis of the co-founder of Animoca Brands
In a recent interview, Animoca Brands Co-Founder and Executive Chairman Yat Siu said he believes the NFT market could bounce back.
He said it shouldn’t take a new bubble to see this market recover, because NFTs can also be used in games, for intellectual property rights, and many other things, and this could generate demand.
However, his words clearly convey the idea that the boom in the NFT market has already happened, and that the conditions for a new real boom in the short term do not seem to exist.
On the other hand, however, he believes it is not logical that monthly trading volumes are so low, blaming the summer period above all. In fact, he believes that when market activity resumes we will see more volumes, trades and activity.
This hypothesis could also explain why the main memecoins also performed poorly in June.
The market recovery
A recovery in the memecoin market, after the general decline in June, is expected by many.
It is not certain that the usual memecoins always perform well, given that new ones are constantly being created which sometimes manage to make a splash and thus attract capital that does not flow towards other memecoins.
It may also be that during periods when memecoins – especially new ones – attract a lot of capital, this capital is also drained from the NFT market, and it may be that summer is not a particularly brilliant period for financial markets as a whole.
For example, in June 2021 there was also a decline in monthly NFT volumes, but in July there was the first big bang. June 2022 was a bloodbath, but there had been the implosion of the Earth/Moon ecosystem. In 2023 the decline lasted for eight consecutive months, from March to October.
All this makes it possible to imagine that sooner or later this market could recover, even if perhaps, as Yat Siu says, we will have to wait for a wider and more massive use of NFT technology even beyond the art market.
