The state of the NFT market

The NFT market has seen a surge in popularity in recent years due to the rise of blockchain technology. This surge is also down to blockchain’s ability to provide secure ownership of these digital assets.

In 2021, the NFT market saw huge growth as more and more artists, musicians and other creatives embraced the technology. This technology is a new way for creatives to monetize their work.

After that impressive growth, however, 2022 was marked by a huge decline. In fact, in October 2022, NFT sales were down by more than 90% compared to the year before. What’s more, this decline was apparent in nearly every metric, including both volume and price. 

What are NFTs?

Before considering the NFT market in more detail, we need to discuss what is meant by the term ‘NFT’.

NFT stands for Non-Fungible Token, which is a unique digital asset that represents ownership of a piece of content. For example, artwork, music, videos and other forms of creative work.

These tokens are based on blockchain technology and provide a secure way to verify ownership of these digital assets. NFTs are bought and sold on various online marketplaces. Of course, their value is determined by the NFT market demand for the specific asset.

The growth of NFTs

The popularity of NFTs skyrocketed in 2021, with high-profile sales, widespread media coverage and new platforms emerging. Blockchain technology, the scarcity of unique digital assets and the rise of decentralized finance all combined to fuel this surge.

Moreover, artists, musicians and celebrities started to embrace NFTs as a way to monetize online content and connect with fans. As a result, the NFT market experienced a massive boom, with some NFTs selling for millions of dollars.

One of the key factors driving this growth was the increasing recognition of NFTs as a legitimate asset class. Many investors and collectors started recognizing their potential for significant appreciation in value. This, in turn, led to a growing number of NFT sales, as well as the launch of numerous online marketplaces. Such marketplaces specialize in buying and selling NFTs.

State of the NFT market in December 2022

The NFT market experienced a sharp decline throughout the first quarter of 2022. However, the amount of NFT trading in December 2022 increased by around 35% from the previous month to $318M. Therefore, this continued the rising trend. Average NFT prices, which have been increasing since their lowest point in September, also indicate greater interest and activity.

Research by Consensys sheds some light on the situation in the NFT market at the end of 2022.

– Number of sales

According to the report, in December, the sales count for art and collectibles increased by 52%. Conversely, the gaming industry’s negative trend persisted in December (-2.5%). What’s more, sales for the second half of the year were down 31%. On the other hand, sales of art and collectibles increased by 34%.

The gaming market is far less diverse than the art and collectibles market. In fact, just two NFT collections accounted for 98% of all gaming sales.

– Active wallets

Daily active trading wallets on the NFT market have decreased significantly since November, despite the rise in price and activity. A new low of 8,518 wallets was reached in December. This is explained by the fact that whales in the ecosystem are becoming more responsible for most NFT activity.

– Trade volume

As a result of their dominance in the NFT market, Ethereum and Solana saw most volume growth. This was determined by looking at trade volume by chain throughout December. Compared to November, however, Polygon saw a substantial percentage increase (243%) in volume. This resulted from Polygon’s previous partnerships with well-known businesses like Reddit. On the other hand, in December, Tezos (-67%) and Binance (-44%) both had significant declines.

– NFT marketplaces

A significant development in NFT marketplaces recently took place. As of the end of December, Blur had increased its NFT market share to 37%. Thus, within a few months of being introduced, it had equalled OpenSea’s market share.

Moreover, as the overall trading volume continued to rise in December, Blur surpassed OpenSea in daily trading volume. Blur reached a peak of 26,121 ETH ($33M), as opposed to OpenSea’s 8,340 ETH ($9.9M).

Blur is a marketplace and an aggregator that offers cutting-edge services to professional NFT traders. In particular, it does not charge transaction costs or enforce creator royalties. These features have swiftly garnered popularity among institutional NFT investors, who at the moment are dominating the NFT market.

– Primary and secondary NFT market

Finally, the Consensys research reports the beginning of a divergence between the amount of primary and secondary sales. Secondary sales increased in December while primary sales decreased, showing a slowdown in the creation of new NFTs. This change might show that the market saturation era is over.

Conclusion

In conclusion, the research by Consensys identified some key trends in the NFT market. For example, the market began a recovery in late 2022, although it is still well below previous highs. The type of investors in the market has shifted towards professional investors. Therefore, it seems that small investors have been impacted by the crisis in the crypto world. Another obvious trend is the popularity that Blur has gained as a marketplace, which seems to have surpassed OpenSea.

.

______

Are you interested? Contact us