The global market for Non-Fungible Tokens (NFTs) is experiencing a notable downturn in trading volumes, marking a consistent decline for the third consecutive week of January. According to data from CryptoSlam.io, a leading on-chain data aggregator, the trading sales volume in the NFT sector has fallen to $223 million over the past week, representing a significant 22.5% drop compared to the previous week.

Contrary to the decline in trading volumes, the NFT market has seen a surge in active participants. Recent data reveals that over 734,000 collectors engaged in NFT purchases across various platforms in the last week, indicating a 34% increase. This uptick suggests a growing interest in non-fungible tokens, despite the overall decrease in trading volume.

However, a concerning trend of wash trading has emerged, particularly across Solana and Avalanche collections. Wash trading involves simultaneous buying and selling of the same NFT to create misleading, artificial activity in the marketplace. High levels of wash trading on Solana and Avalanche raise concerns about the authenticity of their NFT transactions, potentially inflating market activity and distorting genuine economic indicators.

Bitcoin Ordinals collections experienced a substantial decline in January, with sales dropping by nearly 35%. Ethereum and Solana-based NFTs also saw significant decreases. In contrast, NFTs on Polygon witnessed a massive 70% increase in sales this month. The Trump Digital Trading Cards Series 2, Polygon's most popular collection, saw a noteworthy 25% increase in floor price, possibly fueled by the current U.S. election season and Trump's campaign.

Conversely, well-established Ethereum-based collections faced declines in recent weeks, with the floor price of CryptoPunks and Bored Ape Yacht Club (BAYC) both down nearly 8% in the past two weeks.

Despite the market's recovery from a prolonged downtrend in Q4 2023, it appears to be entering another bearish phase. This might signify a shift in user interest towards less popular networks, such as Polygon and Avalanche-based collections, both experiencing remarkable growth this month. Rather than a strict contraction, the NFT business seems to be undergoing a transformation and diversification, reflecting changing preferences within the community.