Original Author: ChandlerZ, Foresight News

NFT trading platform X2Y2 announced on March 31 that it will officially cease operations on April 30, 2025. During its three-year operation, the platform had achieved a total trading volume of $5.6 billion.

X2Y2's CEO stated in the announcement that NFT market trading volume has dropped 90% from its peak. He said: "The life and death of a market platform depends on network effects. It's time to let go and build something with more enduring 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, particularly focusing on the potential fusion of AI and crypto technology. They plan to develop an AI-driven decentralized platform aimed at continuously creating value, rather than simply following market trends.

The CEO candidly acknowledged that this transformation might affect the token price due to X2Y2's token being closely linked to its NFT business, but he remains optimistic about the long-term value of the team's new direction.

X2Y2 initially attracted many users through low transaction fees and a no-royalty strategy, but as market competition intensified, its advantages gradually diminished. In 2023, X2Y2's average market share was 8.79%, with a relatively high market share in early 2023, but declining to nearly negligible by the end of the year.

X2Y2's decline is not an isolated case, but a microcosm of the entire NFT industry's downturn. According to The Block's data, Ethereum-based NFT monthly trading volume in March has nearly reached its lowest point in recent years due to the widespread contraction of major platform activities. The continued decline in activity of major markets like OpenSea, Blur, LooksRare, and X2Y2 further confirms the severe challenges facing the NFT industry.

Sluggish NFT Market

Between 2021 and 2022, the NFT market rapidly rose as a crucial branch of the blockchain industry, becoming the core driving force for Ethereum network growth after DeFi. Driven by active trading, user influx, and capital injection, blue-chip NFT projects like OpenSea, CryptoPunks, and BAYC quickly spawned an emerging market valued at over $100 billion. However, since the second half of 2022, NFT trading volume began a cliff-like decline, with blue-chip project values significantly shrinking, and the entire track falling into a liquidity crisis.

According to The Block's data dashboard, Ethereum-based NFT monthly trading volume in March nearly reached its lowest level in recent years, dropping to $139 million, a 59.9% decrease from $347 million in February, almost approaching the lowest trading volume since June 2021.

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In 2021, NFT trading volume peaked, exceeding $5 billion in a single month. This period was when the NFT concept first broke through on a large scale, with numerous high-value NFT projects represented by CryptoPunks and Bored Ape Yacht Club (BAYC). After 2022, the overall market quickly fell back, with monthly trading amounts noticeably decreasing and averaging around $1 billion. During the same period, the Blur platform emerged rapidly, quickly capturing market share and even temporarily surpassing OpenSea, forming a clear competitive landscape.

According to dune analytics, OpenSea once dominated the NFT market and received investment opportunities with a $10 billion valuation. Its trading volume peaked near $5 billion per month in early 2022, becoming a symbol of the NFT boom.

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After 2023, OpenSea's trading volume significantly shrank, with users and funds dramatically flowing out and market share visibly declining. The market gradually entered a rational, even overcooled stage. In March, OpenSea's active users dropped 22% to 165,000.

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Struggling ETH

On March 31, the ETH/BTC ratio fell to 0.02193, its lowest point in five years. Since the beginning of the year, ETH has dropped 39% relative to BTC, marking the first time in 12 months after Bitcoin's reward halving that ETH has underperformed BTC.

According to glassnode data, the last time ETH performed so poorly compared to BTC was in the third quarter of 2019, when the ratio dropped to 0.0164, with a quarterly decline of 46%. This historic performance again reveals Ethereum's lack of sufficient intrinsic growth momentum to support its value stability when facing market cycle changes.

The decline in the ETH/BTC ratio reflects the deep-seated challenges facing Ethereum. DeFi and NFT once contributed 75% of Ethereum's on-chain activity, and with both cooling simultaneously and lacking new narrative relay, the NFT market crash and sharp decline in Ethereum gas fees directly impacted ETH's intrinsic economic dynamics. As the largest source of high-frequency applications on the Ethereum chain, the NFT market's cooling significantly reduced on-chain trading demand, leading to decreased gas fee income.

At this point, ETH's economic model of promoting network value through high gas consumption has clearly encountered a bottleneck. With DeFi project adjustments and blue-chip NFT value evaporation, ETH's value foundation is also shaking.

Moreover, the ETH/BTC ratio's decline is also related to Ethereum's technical path. Although Ethereum's PoS transition solved energy consumption issues, it fundamentally did not address the key factor of market demand sustainability. Ethereum's successful transformation, while bringing higher efficiency and lower costs in the long run, has minimal impact on ETH price in the short term, especially against the backdrop of an overall sluggish market environment, making ETH's value performance appear particularly weak.

Ethereum's Future Challenges and Breakthroughs: Exploring New Growth Points

Facing current challenges, Ethereum urgently needs to find new growth points to restore its leadership in the crypto field. The NFT market's stalling has brought negative effects that are difficult to reverse in the short term. The network's declining activity, shrinking gas fee income, and systemic asset credit crisis have caused Ethereum's economic model to lose balance in market turbulence.

The continued decline of the ETH/BTC ratio and loss of market confidence signal that the Ethereum ecosystem needs a new breakthrough and rebirth after the NFT market crash. Whether Ethereum can break through its current predicament and regain market favor remains to be seen, and finding a breakthrough in emerging asset classes and blockchain technology innovation will determine ETH's future.