Non-fungible token (NFT) production on Ethereum, or the value of the primary sales generated from NFT minting, fell to an all-time low of US$17.55 million in September, down 12.4% from US$20.05 million in August, according to Forkast Labs data.

NFTs are blockchain-based digital assets that can provide information on digital ownership. Notable collections like the Bored Ape Yacht Club (BAYC) were trading at a floor price of 128 ETH (US$211,000) in May 2022, before dropping more than 60% along with other notable NFT collections like CryptoPunks, which fell 60.4% to 45 Eth (US$72,727), from an all-time high of 113.9 Eth (US$184,080) recorded on Oct. 9, 2021.

“Blue-chip NFT collections such as Bored Ape Yacht Club and CryptoPunks serve as indicators of broader NFT market sentiment. Their decline might signify a shift in investor sentiment, perhaps questioning the intrinsic value of such assets,” Matan Doyich, the chief executive officer of Crypto Index, a firm building centralized infrastructure for tokenized crypto exchange-traded funds, told Forkast.

Reflecting the overall NFT bear market, the Forkast ETH NFT Composite, an index that measures the performance of the top 250 NFTs in the Ethereum blockchain, fell 48% year-to-date to an all-time low of 715.22 points recorded on Sept. 28.

NFT production on the Polygon blockchain fell to a seven-month low of US$4.7 million in September, down from a yearly high of US$14.44 million in August. Polygon NFT production is up 219% year-to-date, from US$1.47 million in January. Despite the rising numbers, the Forkast POL NFT Composite fell over 46% year-to-date.

The overall NFT market slump, along with the decrease in NFT production, can be attributed to a loss of interest by NFT investors, according to Anndy Lian, author of NFT: From Zero to Hero.

“The NFT market was driven by a lot of hype in 2021. However, this has died down in recent months, as people have become more realistic and choosy about the kind of NFTs they want,“ said Lian.

NFT services revenue on Ethereum, or total marketplace fees and creator royalties from secondary sales, fell 84.4% year-to-date to US$6.01 million in September from US$38.74 million in January according to Forkast Labs data.

At OpenSea, one of the world’s largest NFT marketplaces, the protocol’s monthly NFT trading volume fell 31.8% to US$76.79 million in September from US$112.74 million in August, according to data from The Block.

Blur, OpenSea’s rival marketplace, had its trading volume fall 38.3% to US$150.42 million in September, down from US$243.92 million in August.

“To reignite interest in NFTs, the industry needs to see and demand innovations that go beyond digital art and collectibles, such as incorporating NFTs into more substantial real-world applications,” Doyich told Forkast.

This year brought new use cases for NFTs, which will be needed to drive institutional investors, according to David Tng, managing director at TZ APAC, the Asian entity of the Tezos blockchain.

“NFTs will rely on the same pain point of needing to prove their utility, especially against the backdrop of a very volatile market. However, we are still seeing rapid growth and innovation. Enterprises and artists continue to use NFTs as a platform to explore, create and engage with their audiences,” wrote Tng, in a statement shared with Forkast.

Despite the market slump, globally recognized brands continue adopting NFTs. Starbucks launched an NFT version of its iconic pumpkin spice latte last Thursday, to commemorate the 20-year anniversary of the iconic drink. The NFTs worth US$20 have no minting limit and users will receive 250 bonus points that can be spent to improve their Starbucks Odyssey experience, which is the company’s Web3 rewards and loyalty platform.