On March 31, the NFT trading platform X2Y2 announced that it would officially cease operations on April 30, 2025. The platform recorded a total trading volume of $5.6 billion during its three years of operation.
The CEO of X2Y2 stated that NFT market trading volume has decreased by 90% from its peak, saying: 'The survival of market platforms depends on network effects. It's time to let go and create something with more lasting value.'
The team emphasized that this is not a complete farewell but a strategic transformation. Over the past year, they have been exploring the AI field, focusing particularly on the potential for integrating AI with crypto technology. They plan to develop an AI-driven decentralized platform aimed at continuously creating value rather than merely following market trends.
The CEO admitted that since X2Y2 tokens are closely linked to its NFT business, this transition may affect token prices, but he remains optimistic about the long-term value of the team's new direction.
X2Y2 initially attracted a large number of users through low transaction fees and a no-royalty strategy. However, as market competition intensified, its advantages gradually weakened. In 2023, X2Y2's average market share was 8.79%, having a relatively high market share at the beginning of the year, but by the end of the year, its market share had fallen to negligible levels.
The decline of X2Y2 is not an isolated case but a reflection of the overall downturn in the NFT industry. According to data from The Block, due to the general shrinkage of major platform activities, the monthly trading volume of Ethereum-based NFTs almost fell to its lowest point in recent years in March.
The activity of major markets such as OpenSea, Blur, LooksRare, and X2Y2 continues to decline, further confirming that the NFT industry is facing severe challenges.
The sluggish NFT market
Between 2021 and 2022, the NFT market rapidly rose as an important branch of the blockchain industry, becoming the core driving force behind the growth of the Ethereum network after DeFi. Driven by active trading, user influx, and capital injection, blue-chip NFT projects like OpenSea, CryptoPunks, and BAYC quickly gave birth to a new market with a valuation exceeding $100 billion.
However, since the second half of 2022, NFT trading volumes have plummeted, blue-chip project values have significantly shrunk, and the entire sector has fallen into a liquidity crisis.
According to data from The Block's dashboard, the monthly trading volume of Ethereum-based NFTs in March nearly hit its lowest level in recent years, dropping to $139 million, a 59.9% decrease from February's $347 million, approaching the lowest trading volume since June 2021.
In 2021, NFT trading volumes peaked, with single-month totals exceeding $5 billion. This period marked the first large-scale breakout of the NFT concept, with numerous high-value projects such as CryptoPunks and Bored Ape Yacht Club (BAYC) emerging.
After 2022, the overall market quickly retreated, with monthly trading volumes significantly declining, averaging around $1 billion. During the same period, the Blur platform rose rapidly, quickly capturing market share and even momentarily surpassing OpenSea, forming a clear competitive landscape.
According to data from Dune Analytics, OpenSea once dominated the NFT market and received investment opportunities at a valuation of $10 billion. The peak trading volume at the beginning of 2022 even approached $5 billion per month, becoming a symbol of the NFT boom.
After 2023, OpenSea's trading volume has significantly shrunk, with users and funds greatly lost, and market share noticeably declining. The market has gradually entered a rational or even overly cold phase. In March, the number of active users on OpenSea fell by 22% to 165,000.
The unrescuable ETH
On March 31, the ETH/BTC ratio fell to 0.02193, the lowest in five years. Since the beginning of the year, ETH has fallen by 39% relative to BTC, marking the first time ETH has underperformed BTC within 12 months after the Bitcoin reward halving.
According to data from Glassnode, the last time ETH performed so poorly against BTC was in the third quarter of 2019, when the ratio dropped to 0.0164, with a quarterly decline of 46%. This historic performance once again reveals that Ethereum lacks sufficient endogenous growth momentum to support its value stability when facing market cycle changes.
The decline in the ETH/BTC ratio reflects the deep-seated dilemmas facing Ethereum. DeFi and NFT once contributed 75% of the on-chain activities of Ethereum. When both cool down simultaneously and lack new narratives, the collapse of the NFT market and the sharp decline in Ethereum's Gas fees directly affect ETH's intrinsic economic momentum.
As once the largest source of high-frequency applications on the Ethereum chain, the cooling of the NFT market has significantly reduced on-chain transaction demand, leading to a decline in Gas fee revenue.
At this time, the economic model that ETH relied on—promoting network value through high Gas consumption—clearly encountered bottlenecks. With the adjustment of DeFi projects and the evaporation of blue-chip NFT values, the value foundation of ETH also began to shake.
In addition, the decline in the ETH/BTC ratio is also related to Ethereum's technical path. Although Ethereum's PoS transformation has addressed issues such as energy consumption, it has not fundamentally resolved the key factor affecting Ethereum's price performance: the sustainability of market demand.
The successful transformation of Ethereum, while bringing higher efficiency and lower costs to the network in the long run, has had a negligible impact on ETH prices in the short term, especially against the backdrop of an overall poor market environment, making ETH's value performance appear even weaker.
The predicament and breakthroughs of ETH in the future: exploring new growth points
In the face of the current predicament, Ethereum urgently needs to find new growth points to restore its leadership in the crypto space. The negative effects brought by the slowdown of the NFT market are difficult to reverse in the short term, as the network's activity decreases, Gas fee revenue shrinks, and a systemic crisis of asset credit causes Ethereum's economic model to lose balance amid market turbulence.
The continued decline of the ETH/BTC ratio and the loss of market confidence indicate that the Ethereum ecosystem, after experiencing the collapse of the NFT market, needs a new breakthrough and rebirth. Whether Ethereum can overcome its current predicament and regain market favor will still require the test of time. The ability to find breakthroughs in emerging asset classes and blockchain technology innovation will determine the future fate of ETH.
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