After the NFT Collapse: Is Speculation Dead, and Utility the Future?

Original author: Sanqing, Foresight News

On January 5th, the NFT Paris developer conference, originally scheduled for February, was abruptly canceled. The banks of the Seine, once the site of all-night parties, are now left with only a cold official announcement tweet: "The market crash hit us hard. Even with aggressive cost-cutting, we still cannot sustain it."

Five years ago, digital artist Beeple's work "Everydays: The First 5000 Days" sold for a staggering $69.3 million at Christie's auction house. Subsequently, from CryptoPunks fetching tens of millions of dollars to countless digital collectibles backed by mainstream institutions, that was the golden age of NFTs.

From a record-breaking auction sale to a forced industry conference cancellation, NFTs have completed a full cycle from frenzy to reckoning in just five years.

Image - Everydays: The First 5000 Days NFT

Imbalance in NFT Market Supply and Demand

Supply Explosion. According to CryptoSlam data, the 2025 supply increased by 35% compared to 1 billion in 2024. Over the past four years, the total NFT count has skyrocketed from 38 million to 1.34 billion, a growth of approximately 3,400%.

Sales Contraction. According to CryptoSlam data, the total NFT sales volume in 2025 was approximately $5.63 billion, a 37% decrease from $8.9 billion in 2024. According to CoinGecko data, the total NFT market capitalization has fallen from a peak of around $17 billion in April 2022 to about $2.4 billion by the end of 2025, a drop of approximately 86%. In 2025 alone, the total NFT market cap shrank from about $9.2 billion in January to its year-end size, representing a 68% decline for the year.

Liquidity Dilution. As minting barriers lowered, the market entered a "high-frequency, low-price" mode. According to CryptoSlam data, the average sale price has fallen from $124 in 2024 to $96 by the end of 2025. Compared to the average sale price exceeding $400 during the peak bubble of 2021-2022, it has lost three-quarters of its value.

Image Source: CryptoSlam

Even once-top-tier NFT projects and blue-chip NFTs have not escaped the downturn. Taking CryptoPunks as an example, its floor price has fallen to around 30 ETH, down 78% from its 2021 peak of 125 ETH; Bored Ape Yacht Club (BAYC) has fallen 83% from around 30 ETH to about 5 ETH; Azuki has plummeted 93% from around 12 ETH to 0.8 ETH.

The Collective "Exodus" and Evolution of Platforms

The moves by industry leaders mark the end of this cycle.

OpenSea, which once firmly held the top spot in the NFT marketplace, saw its platform revenue drop from $50-120 million per month during the NFT golden age to less than one million.

Consequently, OpenSea announced a pivot, transforming from a pure "NFT marketplace" into a universal on-chain trading hub for "Trade Everything," encompassing physical collectibles and digital assets like tokens, and confirmed it will issue a token.

Blur, which debuted at its peak, has seen its TVL hit new lows, and its token price has fallen 99% from its high.

Then there's Magic Eden, which rose on Solana. After a year of operation, it launched its token. Affected by the NFT market conditions and the realization of bearish expectations, platform trading volume began to shrink, and its token price also fell over 98% from its high.

Even projects that couldn't keep up with the changing times, like the veteran NFT marketplace X2Y2, have been eliminated, completely shutting down, with the team pivoting to the AI field.

From "Token" to "Brand"

Amidst the widespread gloom, Pudgy Penguins has successfully broken through the downtrend, becoming an industry outlier. Its success does not rely on complex token technology innovations or short-term speculative hype, but rather on transforming a digital IP into physical consumer goods, gradually building a sustainable brand ecosystem that bridges Web3 and traditional retail.

Through the dual-revenue model implemented by CEO Luca Netz, Pudgy Penguins deeply integrates IP licensing with physical goods. Its physical toys have entered over 10,000 global retail channels, including Walmart, Target, and Walgreens. According to AInvest reports, this pivot has brought the project approximately $50 million in annual revenue, effectively offsetting the impact of the overall crypto market contraction.

Image - Pudgy Penguins toy shelf in a US Walmart

During the 2025 Christmas season, Pudgy Penguins spent approximately $500,000 to project a giant animation onto the Las Vegas landmark Sphere.

Image - Pudgy Penguins image on the Sphere

This advertisement, seen by millions of tourists, avoided crypto jargon and NFT buzzwords, presenting only a family-friendly IP image, stimulating secondary market liquidity through brand exposure. Over the past 14 days, the floor price of this NFT has risen 25%, and trading volume has increased by about 33%.

This shift in thinking from speculation to cultural operation seems to be becoming a consensus among industry survivors. In May of last year, Yuga Labs, the publisher of Bored Ape Yacht Club (BAYC), transferred the IP rights of the top NFT project CryptoPunks to the non-profit Infinite Node Foundation, aiming to strip it of its speculative, price-volatile nature and seek longer-term artistic preservation and cultural operation.

Physical Backing and Functional Return

Beyond IP branding, NFTs are becoming the underlying tool for connecting to real-world assets (RWA).

Physical Card Trading. The platform Courtyard.io is changing the game. They deposit authentic Pokémon cards into certified vaults and tokenize them as NFTs. In a 30-day period at the end of 2025, the platform processed over 230,000 transactions, generating approximately $12.7 million in sales, proving strong market demand for this high-liquidity, physically-backed asset.

Functional Tickets. FIFA has also joined this camp, introducing "priority purchase right" NFTs in the ticket sales for the 2026 World Cup. These NFTs are not for speculation but serve as a verification tool to prevent scalper premiums and price fraud in the secondary market.

What Has Died in NFTs, and What Remains?

NFTs are not "dead," but they have indeed died once.

What died is the fantasy of viewing NFTs as a financial asset that could exist detached from real-world value, minted and traded endlessly based on narratives alone. In the face of infinite supply and limited demand, this path was destined to be unsustainable.

What remains is the role of NFTs as a "credential layer." They are no longer required to create value in isolation but are embedded within IP brands, physical assets, and functional scenarios, serving the foundational functions of ownership verification, transfer, participation, and authentication.

From Pudgy Penguins' toy shelves to the on-chain circulation of physical cards, to the anti-scalping mechanisms for World Cup tickets, NFTs are stepping down from the speculative stage and returning to the toolbox.

For the NFT speculative market, this is undoubtedly a winter. But for NFTs themselves, this is more like a rebirth after disenchantment.