While the broader crypto market appears to be moving toward a potential bull-market phase, the non-fungible token (NFT) sector, led by collections like CryptoPunks and Bored Apes, is experiencing a contrasting trend.

The Nansen NFT-500 index, which gauges the valuation of the top 500 NFTs, has seen a 50% decline year-to-date when measured in Ether (ETH) and a 16% drop in US dollar terms.

Meanwhile, the Blue-Chip 10 index, an index focused on only the most popular NFT collections like CryptoPunks and the Bored Ape Yacht Club (BAYC), is down by 44% in ETH terms and 1.7% in USD.

Negative correlation between NFT and ETH prices

In comments given to CoinDesk on Thursday, Nick Ruck, chief operating officer of ContentFi, attributed the subdued NFT market performance to the negative correlation between NFT prices and the price of ETH.

He noted that NFTs have survived their initial market cycle but haven’t witnessed a new technological breakthrough or significant user interest, unlike popular decentralized finance (DeFi) protocols such as Uniswap.

Despite the overall dip, there are signs of growth in the NFT market, particularly in NFTs based on utility in gaming rather than simple so-called JPEGs, and in the Bitcoin Ordinals space.