Forex in this article
• NFT trading volume decreased in Q1 2022
• The number of users, on the other hand, has probably not decreased
• Latin America and North America are the most important world regions for NFTs
Declining transaction volume, lower web traffic, reduced publicity – The NFT industry is not spared the recent downturn in the international capital markets. As with cryptocurrencies, the first few months of 2022 have been disappointing for NFTs. What did the Chainalysis status report find out?
Macroeconomic conditions are currently at odds with the polarizing NFTs
NFTs are extremely polarizing assets: Crypto fans are excited about the tokenized representations hidden on a blockchain. Skeptics, on the other hand, consider NFTs to be an erratic speculative bubble whose snowball system will soon collapse like a house of cards. For example, while Snoop Dog is a big fan of NFTs and uses the Cardano blockchain to release tokenized works of art, Kanye West does not believe in these new assets at all, as “BTC-ECHO” reports.
Despite the criticism that can not be ignored, NFTs were able to pick up speed in 2021. In the good stock market year with a very liquid money supply, low interest rates and a good mood, especially in the tech sector, the new tokenized paintings thrive. But in 2022, the trend reversed: The high inflation rate that the US Federal Reserve wants to address with sharp rises in key interest rates is particularly detrimental to asset classes considered risky, such as speculative tech high-flyers, cryptocurrencies and also NFTs.
Declining transaction volume
It is therefore not surprising that trading volume on the world’s largest NFT marketplace, OpenSea, has collapsed by up to 70 percent, as “BTC-ECHO” writes. The NFT report released in early May by data analytics firm Chainalysis confirms declining interest in NFTs. NFT transaction activity has been declining sharply especially since mid-February.
In September 2021, the previous record level for daily transactions worth almost four billion US dollars was reached – in April, this important indicator temporarily fell below one billion US dollars. The average volume per transaction also fell from just under $ 2,300 (November 2021) to below $ 500 in March.
The NFT market in general is extremely volatile
However, these statistics should be treated with caution, emphasizes “BTC-ECHO”. Volatility in the NFT market is traditionally very high and is subject to daily fluctuations that do not necessarily indicate an overall trend. In September 2021, for example, NFT trading volume quickly corrected to just $ 1.5 billion after peaking at $ 4 billion. Decreases in trading volume should therefore not be directly perceived as meaning that investors are less interested.
Transaction volume rose again in April
It is therefore too early to announce the end of the NFT boom. Statistics also show that NFT trading volume rose again in early April. “Chainalysis” wrote in the report: “But the NFT market started to recover in mid-April and is now approaching the weekly volume it reached earlier in the year, which probably reflects the recent launch of Bored Apes Metaverse project Yacht Club . ”
Number of users probably constant
In addition, the number of active users also does not indicate an NFT crash. At the end of 2021, Chainalysis counted approximately 625,000 unique addresses related to NFT trading. By the beginning of this year, the number of these addresses should have risen to 950,000 – a growth of more than 50 percent.
“In the second quarter of 2022 (as of May 1) addresses 491,000 traded NFTs, with the NFT market continuing its quarterly growth trend in the number of participants,” the research firm writes in the report. Although the quarter is far from over, this figure is already significantly higher than in the first quarter last year, when only a few thousand addresses traded NFTs. While the volume has dropped significantly and the web traffic has also dropped, the number of people interested in NFT does not appear to have dropped to date.
Latin America as the most important NFT region
The analysis of the geographical distribution of NFT trading volume also yielded interesting results. In the spring of 2022, about 26 percent of NFTs were traded in Latin America, placing the region ahead of North America, which ranks second with about 23 percent. Western Europe, Central and South Asia, Eastern Asia, Eastern Europe, the Middle East and Eastern Europe are in this order. Upbringing behind is Africa, where less than 5 percent of NFTs were traded.
According to Chainalysis data, no single region in the world accounts for more than 30 percent of global NFT trades – proving that tokenized images are a global phenomenon. Only on the African continent is the dynamics still extremely low.
All in all, it seems exaggerated to sing goodbye to NFTs, according to “BTC-ECHO”. Rather, the declining trading volume indicates that not everything that says “NFT” on it will really go through the roof. As a result, the recent break may mean that the “separation of wheat from chaff” in the NFT sector may continue. An important influencing factor for the future of NFTs is undoubtedly the further development of the supposed megatrend Metaverse.
Image sources: Sergei Elagin / Shutterstock.com, archy13 / Shutterstock.com