NFT market slumps, $1.2 billion wiped out in a week

The ongoing NFT price slump has erased over $1.2 billion in market value within a week, as fading momentum in Ethereum drags sentiment lower.

Data from NFT Price Floor shows the total NFT market cap falling 12% to $8.1 billion, its steepest weekly decline in months and a signal that investor appetite for digital collectibles is cooling.

The downturn coincided with a 9% pullback in ETH prices, which fell from a mid-week high of nearly $4,700 to around $4,260. Because most NFTs are minted and traded on the Ethereum blockchain, fluctuations in ETH often translate into corresponding changes in NFT valuations.

“This NFT market slump is a reminder that NFT prices remain heavily correlated with Ethereum’s performance,” said Marcus Lee, Head of Digital Asset Research at Blockworks. “Until the sector decouples from ETH, volatility will be the rule, not the exception.”

Leading collections hit hard by valuation losses

The NFT market slump was reflected across top-tier collections, many of which saw double-digit losses in market capitalization. CryptoPunks, the largest NFT collection by market value, lost nearly $300 million in less than a week, falling 12% from $2.4 billion to $2.1 billion.

Sales volumes also declined sharply. Data from CryptoSlam showed CryptoPunks sales reached just $12.7 million over the past seven days, a 34% drop. The number of transactions fell by 28% over the same period, totaling only 51 sales.

The Bored Ape Yacht Club (BAYC), once the second most valuable collection, slipped to third place. Its market capitalization dropped from $602 million to $482.3 million, representing a nearly 20% decline in just a few days.

“The NFT market slump highlights how speculative valuations can unravel quickly, particularly in collections that rely on community hype,” said Rachel Kim, Senior Analyst at Galaxy Digital.

Penguins rise amid sector downturn

One of the most surprising developments during the NFT market slump was the performance of Pudgy Penguins. Despite losing roughly $100 million in value, the collection climbed to the second-highest market capitalization ranking. On Monday, Pudgy Penguins was valued at $491 million, down from $591 million last Wednesday.

The collection’s resilience came amid news that Nasdaq-listed blockchain firm BTCS Inc. added three Pudgy Penguins NFTs to its corporate digital asset treasury. The purchase marked one of the first publicly traded companies to formally recognize NFTs as a treasury asset.

“This shows that, even during an NFT market slump, institutional players are beginning to treat certain collections as blue-chip assets,” said Kim. “That type of recognition could provide long-term support, even if short-term volatility persists.”

Broader implications for NFT investors

The ongoing NFT market slump underscores one of the sector’s biggest unresolved challenges: how to value digital collectibles in a landscape still tethered almost entirely to cryptocurrency price movements. Unlike traditional art or physical collectibles, the dollar-denominated worth of NFTs is highly sensitive to fluctuations in ETH, which remains one of the most volatile large-cap assets.

This volatility was on full display in the past 24 hours as ETH fell 4%, dragging nearly every top 10 NFT collection lower. Even blue-chip projects like Bored Ape Yacht Club (BAYC) and CryptoPunks long considered status symbols in the NFT space recorded notable drops. For casual traders, this reinforces the perception of NFTs as a risky asset class tied to broader crypto headwinds rather than independent fundamentals.

Analysts point out that until more reliable and independent valuation frameworks are developed such as pricing models based on community size, IP licensing potential, secondary revenue streams, or cultural relevance, the NFT market will remain overly exposed to ETH cycles. This dependency makes it difficult for the sector to attract long-term institutional investors who seek clearer risk-reward profiles.

That said, the downturn may also be creating opportunities. While weaker collections could continue to lose value, certain projects with strong branding, engaged communities, and demonstrated resilience like Pudgy Penguins, which recently expanded into physical toys and mainstream retail partnerships may emerge as attractive entry points for strategic buyers.

Long-term investors willing to look past short-term price swings could find value in projects diversifying their revenue models beyond just token sales.

“The NFT market slump doesn’t necessarily signal the end of the sector,” said Lee of Blockworks. “Instead, it highlights the urgent need for more robust valuation frameworks, stronger real-world use cases, and a reduced reliance on the performance of a single crypto asset like ETH.”

In other words, while current conditions reflect fragility, they may also represent the growing pains of a maturing industry, one that could evolve from speculative hype into sustainable digital ownership ecosystems.