Will digital collectibles be obsolete by 2022?

Admittedly, with some projects, the motto of the past year’s hype seemed to have been “The most important thing was something with NFTs”. In any case, it is an open question as to what use, for example, digital toothpaste should have in the Metaverse – we have formed our own image of the virtual parallel world of the blockchain game “The Sandbox” on the blockchain.

Because NFTs seem to be particularly successful in the arts and culture industry, there are also differing opinions from this scene about the signs of the digital shortage. For example, rapper Snoop Dogg is using the Cardano blockchain to tokenize new artwork, while Kanye West has absolutely no interest in the topic.

How is the NFT market doing now? Most recently, NFT trading volume on OpenSea is said to have collapsed by 70 percent. In a new report pre-shared with BTC-ECHO, the blockchain research firm chain analysis scrutinized the industry and came, among other things to the following conclusions.

The NFT market is volatile

While the NFT market appears to have grown overall, some outliers can be seen in the chart. NFT transaction activity has dropped drastically since mid-February this year.

The NFT market is growing, but not consistently. Source: Chainalysis

At the same time, however, it can also be seen that the NFT market has been in flux since the summer of last year. For example, NFT volume rose to nearly $4 billion in September 2021, only to return to around $1.5 billion in the same month – a correction of over 60 percent.

Is it conceivable that the negative development on the NFT market will continue? At the beginning of the second quarter of 2022, for example, another outlier to the north can be identified.

“However, the NFT market began to recover in mid-April and is now approaching the weekly volume it reached earlier this year, likely due to the recent launch of Bored Ape Yacht Club’s Metaverse project,” Chainalysis writes in the report .

Active NFT traders are steadily increasing

The number of active NFT buyers and sellers still seems to be steadily increasing.

Chainalysis NFT report chart
The number of active NFT traders is increasing. Source: Chainalysis

By 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 increased to 950,000 – a growth of more than 50 percent.

“In the second quarter of 2022 (as of May 1), 491,000 traded NFT addresses, with the NFT market continuing its quarterly growth trend in the number of participants,” the research firm writes in the report.

Central and South America drives the NFT market

According to the report, most of the web traffic around NFTs originates in Central and South America.

Chainalysis NFT report chart
Web traffic has generally leveled off in early 2022. Source: Chainalysis

North America and Western Europe are second and third in the ranking. Meanwhile, according to Chainalysis, no region accounts for more than 40 percent of all traffic. This may be an indication that NFTs are targeting a global audience rather than just selected countries.

Only Africa seems to show little dynamism in the development of web traffic and is therefore quite uninterested.

So while the number of NFT traders is increasing, the transaction volume and web traffic around digital artworks appears to be decreasing. Whether or not NFTs are obsolete is not so easy to answer. Rather, it seems possible that the wheat is now being separated from the chaff when it comes to NFT projects.

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