NFT market may make a comeback after BTC reaches cycle peak

The NFT lending market has seen a 97% drop in transaction volume from $1 billion in January 2024 to $50 million in May, with borrower activity down 90% and lenders down 78%.
Analysts suggest the industry needs "new catalysts" like real-world asset NFTs (RWA), tokenized real estate, or yield assets to recover, as current infrastructure remains underutilized.
The DePIN ecosystem's growth could drive NFT revival by linking NFTs to real-world asset value, enabling broader market circulation.
NFT market trends may follow broader crypto cycles, with a potential rebound in 2025–2026, though not matching the 2021/22 frenzy due to absent metaverse speculation and wealthy trader hype.
Long-term NFT growth could hinge on factors like BTC hitting $1 million, metaverse maturity, AI-driven economic shifts, and AR/VR adoption by 2030.
Art NFTs may resurge if they shift from speculation to cultural/practical value, but wider adoption depends on blockchain scalability and security improvements.
RWA-linked NFTs show promise, with platforms like Courtyard driving $22.3 million in Polygon-based NFT sales, briefly surpassing Ethereum in weekly volume.
The NFT industry awaits a comprehensive rebound, relying on RWA integration and broader market recovery to reignite lending and trading activity.

Blockchain analytics platform DappRadar said that RWA assets pegged to NFTs is one of the key catalysts that could reignite the fading NFT lending industry, which is suffering from a plunge in trading volume and user activity.

DappRadar analyst Sara Gherghelas said in a May 27 report that transaction volume in the NFT lending market ( which allows NFT holders to take out loans using their tokens as collateral ) has fallen 97% from a peak of around $1 billion in January 2024 to $50 million in May.

Gherghelas said that for NFT lending to “move beyond survival mode,” “new catalysts” are needed to reinvigorate the industry, such as real-world asset NFTs, tokenized real estate, or yield assets that can unlock more stable and trustworthy sources of collateral.

PowerBeats believes that the prosperity of the DePIN ecosystem is also one of the factors driving the recovery of NFT. Just like real-world asset NFTs, tokenized real estate or income assets, NFTs in the DePIN project can also circulate throughout the market and are also associated with the real value of real-world assets.

“So far, there has been no compelling reason for a rebound in NFT lending in 2025. While the infrastructure is still there and platforms are still active, activity has slowed across the board,” Gherghelas said. “For now, the industry seems to be in a waiting state, waiting for the market to recover or new use cases to reignite interest.”

The report added that borrower activity has fallen 90% since January last year, and the number of people willing to lend has fallen 78%. The average NFT loan size has also fallen from a peak of $22,000 in 2022 to $4,000 in May, a year-on-year decrease of 71%.

This shift suggests that users are either borrowing against lower-value assets as collateral or simply becoming more conservative with leverage.

The slowdown in NFT lending is partly related to the decline in the overall NFT market, with transaction volume falling 61% to $1.5 billion in the first quarter, compared to $4.1 billion in the same period last year.

NFTs are expected to make a comeback in 2025

Yehudah Petscher, strategist at CryptoSlam NFT data platform and SlamAI, said the market is ready to rebound , but the outlook is more muted than previous highs.

“This will likely put the NFT market at a peak in the first quarter of 2026, but don’t expect a repeat of the 2021/22 frenzy we saw in NFTs,” Petscher said. Because the previous NFT bull run was largely driven by metaverse speculation and wealthy traders — factors that are mostly absent in the current cycle.

He suggested that momentum in digital collectibles will follow broader crypto market trends.

“It will likely take a full cycle for us to see a parabolic rise in NFTs,” he said, adding: “There is a perfect storm coming up in 2030: BTC price reaches $1 million, the metaverse matures, AI reshapes the labor economy (whether through universal basic income or universal high income, falling production costs, etc.), AR/VR becomes popular, and NFT ownership equals brand ownership.”

According to Andy Lian, an author and blockchain expert who has served multiple governments, if art NFTs can escape the “speculative frenzy,” they could see a resurgence as “digital ownership becomes more accepted by a younger, tech-savvy population.”

However, the wider adoption of NFTs still depends on improvements in the scalability and security of blockchain networks to "build user confidence." He added that art NFTs must go beyond hype and their value should be rooted in cultural significance or practical functions.

Conclusion

At the same time, the DappRadar report stated that the NFT industry needs new catalysts to rebound comprehensively, and real-world assets (RWA) linked to NFTs may reignite the vitality of the digital collectibles lending industry.

Earlier this year, RWA NFTs showed promise. In April, digital collectibles on RWA’s trading platform Courtyard drove $22.3 million in sales of Polygon-based NFTs. This put the blockchain ahead of Ethereum in weekly sales.

refer to

https://dappradar.com/blog/gondi-leads-as-nft-lending-is-down-94