The Great NFT Bubble: How $17B Vanished Into JPEGs
In March 2021, Christie's — one of the oldest auction houses in the world — sold something that nobody could hang on a wall.
A JPEG.
By an artist named Beeple.
For $69.3 million.
That same month, the first tweet from Jack Dorsey sold for $2.9 million.
Today?
- The Beeple JPEG is reportedly worth around $2,300
- The Dorsey tweet was last valued at $280
That's a 99.9% loss.
Welcome to the story of the NFT bubble.
A 21,000% Year
By the end of 2021, NFT trading volume had ballooned from $82 million the year before to around $17.6 billion.
A 21,000% increase. In a single year.
Jimmy Fallon, Snoop Dogg, Paris Hilton, Louis Vuitton, YouTube, UC Berkeley — everyone got sucked in.
Then it all fell apart.
- Platforms shut down
- Auction houses packed up their NFT departments
- Celebrities started getting sued
- One study found that roughly 95% of NFT art now has no value at all
But how did we get here? And is there anything left worth keeping?
What Even Is an NFT?
An NFT — non-fungible token — is essentially a digital certificate of ownership recorded on a blockchain.
You're not buying the image itself. You're buying a record that says you own it.
Think of it like the deed to a house. Anyone can drive past and take a photo. Only one person holds the deed.
The Origin Story (Surprisingly Wholesome)
In May 2014, artist Kevin McCoy and tech entrepreneur Anil Dash digitized a work of art at a New York City hackathon.
Their goal?
"The only thing we wanted to do was to ensure that artists could make money and have control over their work." — Anil Dash
For digital art, this was genuinely new.
A painting is one of a kind by nature. A digital file is the opposite — anyone can copy, download, or screenshot it.
NFTs offered, for the first time, a technological answer to that problem.
The Gold Rush (2018–2021)
For a while, the promise looked real.
- Artist Tyler Hobbs released 999 pieces, cleared ~$400K almost instantly, and eventually racked up $9M in royalties
- An 18-year-old designing Discord logos minted a cartoon that cleared his family's mortgage
- A UCLA digital arts graduate quit his day job after his first NFT sale
And then there's Damien Hirst, the famed British conceptual artist, who created NFTs for thousands of his paintings — then burned the originals.
"I'm not burning my art. I'm transforming it into NFTs."
Sure.
Enter the Celebrities
Once the stories got big enough, the money attracted a different crowd.
Paris Hilton went on Jimmy Fallon. They compared apes. On national television.
Justin Bieber bought a Bored Ape for $1.3 million.
Eminem, Snoop Dogg, Steph Curry, Serena Williams — all in.
The Bored Ape Yacht Club sold 10,000 algorithmically generated cartoons. But the product wasn't really the image.
It was:
- A membership
- A private Discord
- Exclusive IRL events
- A very public signal that you had arrived
The status symbol had a price tag that anyone could look up — which was sort of the whole point.
When Charmin Toilet Paper Launched an NFT
Brands piled in.
- Nike acquired RTFKT in late 2021
- Adidas launched its own collection
- At one point, Charmin Toilet Paper was selling NFTs
That probably should have been a warning sign.
The First Cracks
Beeple — the artist whose JPEG sold for $69M — quietly admitted what many suspected.
Just days after the sale, on Fox News:
"I absolutely think it's a bubble. I go back to the analogy of the beginning of the internet. There was a bubble and the bubble burst."
Even the guy cashing the check knew.
Wash Trading: The Made-Up Market
Beyond speculation, there was outright fabrication.
Wash trading is simple: you sell an NFT to yourself at an inflated price using two wallets. Anyone checking the history assumes that's what the market thinks it's worth.
On one marketplace, LooksRare, wash trading accounted for ~$18 billion — roughly 95% of its reported volume.
A significant chunk of the numbers that made NFTs look enormous were, very literally, made up.
The "What Are You Actually Buying?" Problem
The NFT gives you a receipt. Not the file. Not the copyright.
So what's the value?
Defenders argued: it's verifiable ownership on the blockchain.
But in 2018, Terence Eden made himself the "owner" of the Mona Lisa on the blockchain. Verified by a blockchain art certifier.
The stunt proved the point:
Ownership only means something if everyone agrees it does.
Eventually, enough people stopped agreeing.
The Collapse
The bubble deflated the way most bubbles do — gradually at first, then suddenly.
By May 2022:
- Daily NFT sales had dropped 92% from peak
- Active wallets fell 88% (from 119,000 to ~14,000)
- Collections that commanded hundreds of thousands sat unsold
The damage compounded:
- Justin Bieber's $1.3M Bored Ape → ~$12,000 by early 2026
- Bored Ape Yacht Club floor price: $429K peak → ~$27K by 2025 (93% wiped out)
- NFT trading volumes overall: down 93%
- A 2024 report found 96% of NFT projects were effectively dead, average lifespan just over a year
The Institutions Quietly Backed Out
- Christie's closed their digital arts department in September 2025
- Sotheby's laid off most of its NFT team in 2024
- Nifty Gateway — once moving $300M+ in sales — shut down entirely in early 2026
Then came the lawsuits.
- Nike shut down RTFKT in December 2024 → sued for $5M
- Shaquille O'Neal paid $11M+ to buyers of his Astral project NFTs
Bitcoin and Ethereum have recovered since the 2022 crash.
NFTs haven't.
Is There Anything Left?
Some argue the speculation is gone but the technology didn't die with it.
And when you look at where the serious money has actually moved, there's something to that.
Real-world asset tokenization — tokenizing property, private credit, commodities — crossed $30 billion by Q3 2025, with BlackRock and Franklin Templeton actively involved.
Web3 gaming is another space worth watching, where NFTs carry real in-game utility instead of just a price tag.
Brands like Louis Vuitton, Disney, and the NBA still run NFT programs that are stable and selling well.
The tech was real. The $17B single-year market? That was human greed.
The Psychology Behind the Bubble
The NFT craze was a textbook case of a fatal flaw in markets:
An asset is only worth what a buyer is willing to pay.
When enough buyers share a delusion, prices go up. Higher prices attract more buyers. More buyers push prices even higher.
That's a bubble.
A copy-and-pasteable image clearly isn't worth hundreds of thousands of dollars. But the prices signaled that it was.
The insiders knew. As one NFT trader, Colin Lee, told the Australian Financial Review in 2025:
"We were very much about getting in and getting out within 24 hours."
That sums it up.
The Uncomfortable Parallel
Looking back, it's easy to laugh at the mania.
But it's worth asking:
Are we doing the same thing right now with LLMs?
They're useful. They're worth something.
Hundreds of millions to trillions of dollars in their current state?
That might be yet another case of overenthusiasm for something new to the mainstream.
TL;DR
- 2021: NFTs go from $82M → $17.6B in volume
- JPEGs sell for $69M, celebrities pile in, brands follow
- Wash trading inflates 95% of some markets
- 2022 onward: volumes collapse 93%, platforms close, lawsuits land
- 96% of NFT projects are effectively dead
- Real-world asset tokenization quietly grows to $30B+
- The tech survives. The hype doesn't.
When you sell a JPEG for $69 million, the real question was never about the code or the chain.
It was:
What were people actually buying?
Ownership. Status. The feeling of being early.
Or maybe just the greater fool theory, wrapped in crypto language.