Cryptocurrency exchange Kraken has announced plans to shut down its NFT marketplace to reallocate resources toward new projects. The marketplace will cease listing, bidding, and selling activities after November 27, 2024, with complete closure scheduled for February 27, 2025. This decision reflects the company’s focus on unannounced initiatives currently in development.
In a statement shared with The Block, a Kraken representative explained the rationale behind the closure:
We’ve made the decision to close our NFT marketplace so we can shift more resources into new products and services, including unannounced initiatives in-development. Clients have been informed of the changes and our team will support them as they move their NFTs to their Kraken Wallet or a self-custodial wallet of choice.
The exchange launched its NFT marketplace in beta in November 2022, following an initial teaser in December 2021. Despite the platform’s entry into the NFT space, market conditions have remained challenging.
Related: Kraken Set to Launch Its Own Blockchain, “Ink,” in 2025
NFTs and Their Poor Performance
NFT sales have experienced a significant slowdown since spring 2024. While certain collections, such as CryptoPunks, have seen brief spikes in trading activity, overall weekly NFT trading volumes have not surpassed $200 million since April 2024, according to The Block’s Data Dashboard.
The decision marks a strategic pivot for Kraken, allowing it to focus on other offerings in the evolving cryptocurrency and blockchain sectors. For users, the company has pledged to assist in the transition of NFT assets, ensuring they can be moved to the firm Wallets or external self-custodial solutions before the final closure date.
Kraken’s NFT Marketplace Closure Highlights Challenges in a Declining Market
Kraken’s decision to close its NFT marketplace reflects the broader struggles faced by the NFT market, which has undergone significant contraction since its peak in 2021-2022.
While NFTs are not obsolete, the market has been reshaped by declining interest, reduced trading volumes, and changing perceptions.
The NFT market has seen a sharp decline from its earlier boom years. Trading volumes have dropped nearly 90% from their peak in early 2022, when monthly sales exceeded $2.8 billion, to around $1 billion by mid-2024.
OpenSea, once a dominant NFT marketplace, experienced a stark decrease in daily trading volumes, falling from $405 million in August 2021 to just $5 million in 2024.
The global market value of NFTs has also plummeted, shrinking from over $40 billion in 2021 to less than $10 billion by 2024.
Factors Driving NFT Decline
Several interconnected issues have contributed to the cooling of the NFT market. First, oversaturation played a significant role, as the initial hype led to an influx of NFT projects, many of which failed to provide substantial value or utility.
Public perception has also shifted, with NFTs often associated with speculation and fraud. This negative view has been compounded by regulatory uncertainty, particularly following interventions by the U.S. Securities and Exchange Commission (SEC) in 2023 and then mid-2024.
The initial speculative boom also led to inflated valuations, necessitating a market correction. Competition from emerging technologies, such as artificial intelligence, has further overshadowed NFTs. In 2023, AI-related searches surged by 13,210%, while NFT-related searches dropped by 82%.