Sports merchandise firm Fanatics is divesting its stake in nonfungible token (NFT) company Candy Digital as confidence in the asset class wanes.

On Jan. 4, it was reported that Michael Rubin’s sports company Fanatics was offloading its majority 60% stake in the NFT startup.

Fanatics was founded in 2011 and has become a well-known name in sports merchandising and e-commerce, valued at $31 billion. 

However, the crypto bear market has hit the NFT sector hard in 2022, and Rubin’s firm is seemingly now looking to turn away from “standalone” NFT businesses.

The investor group led by Mike Novogratz’s Galaxy Digital will be purchasing the stake in Candy Digital, according to CNBC. In an email shared with the outlet, Rubin wrote:

He stated that divesting ownership in Candy Digital “allowed us to ensure investors were able to recoup most of their investment via cash or additional shares in Fanatics.”

This was a favorable outcome for investors “especially in an imploding NFT market that has seen precipitous drops in both transaction volumes and prices for standalone NFTs,” he added. NFTs alone would not create much value, according to Rubin, who said:

Fanatics acquired Topps trading cards for roughly $500 million in January 2022. It also acquired the rights to produce Major League Baseball trading cards and then NFTs following Candy Digital’s launch last year.

Related: What remains in the NFT market now that the dust has settled?

Fanatics raised $700 million in fresh capital in December. The funding will be used on potential merger and acquisition opportunities across its collectibles, sports betting and gaming businesses, according to CNBC.

Candy Digital secured $100 million in funding in October 2021 at a valuation of $1.5 billion.

However, the NFT markets have shrunk considerably during the 2022 crypto winter. According to the Nonfungible.com market tracker, daily sales volumes have slumped from over 100,000 sales in January 2022 to around 15,000 today.

Cointelegraph reached out for comment from Fanatics and Candy Digital but had not received a reply at the time of publication.