The global non-fungible token (NFT) sector fell below $1.5 billion in total market capitalization, returning to levels last seen before the sector’s rapid expansion in 2021.
The retracement unfolded alongside a broader crypto market downturn over the past two weeks, CoinGecko data shows. On Jan. 23, total crypto market capitalization stood at about $3.1 trillion, before falling to $2.2 trillion on Friday.
Major assets like Bitcoin (BTC) slid from around $89,000 to about $65,000, while Ether (ETH) fell from $3,000 to near $1,800 throughout the same time frame. Bitcoin and Ethereum are the top two networks for NFTs in terms of 30-day trading volume, according NFT data aggregator CryptoSlam.
The NFT market cap drop follows several high-profile closures and exits, highlighting the sector’s continued contraction.
Rising supply collides with falling demand
The market reset has been compounded by a growing imbalance between NFT supply and buyer demand.
As reported by Cointelegraph on Dec. 31, total NFT supply continued to expand even as sales and prices declined, pushing the sector into a high-volume, low-price structure.
CryptoSlam data showed that the number of NFTs in circulation rose to nearly 1.3 billion in 2025, up by 25% compared to 2024. Total NFT sales fell 37% year-over-year to $5.6 billion, while average sale prices slipped below $100.
The divergence suggests that while minting became cheaper and barriers to issuance fell, buyer participation and spending failed to keep up.
Related: US prosecutors drop OpenSea NFT fraud case after appeals court reversal
Corporate exits and platform closures add pressure
The drop follows a series of high-profile retreats that mirror the market’s pullback. On Jan. 7, footwear giant Nike quietly offloaded RTFKT, the digital collectibles studio it acquired at the height of the NFT boom.
The reported sale followed the company’s decision to shut down operations amid an investor lawsuit.
In addition, marketplace shutdowns have accelerated. Nifty Gateway, one of the earliest NFT platforms, said it will close on Feb. 23 and has entered withdrawal-only mode. The Gemini-owned platform cited a prolonged market downturn as it winds down.
On Jan. 28, social NFT platform Rodeo announced it would cease operations after failing to scale sustainably. Rodeo said it would transition to read-only mode before shutting down entirely in March.
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