The hype around non-fungible tokens (NFTs) has created an infinite number of new projects in 2022. After the various collapses in the industry, many of these digital images no longer found buyers. Majority of NFT Collections Experienced First Bear Market – What’s Next?
From a peak in August 2021 of nearly USD 2.8 billion in 30-day trading volume, the NFT markets have leveled off to USD 100 to USD 200 million in traded values per month. Of this, around 80% falls on Ethereum-based NFTs, followed by 12% dominance by competitor Solana. Polygon and another 9 blockchain platforms share the rest. The picture of a bear market is clear and distinct.
Behavior in the NFT Bear Market
While the then-newly launched Metaversum collection from the Bored Ape founders was grossing hundreds of millions of dollars a day in early May, that amount disappeared as quickly as it came. The NFT markets entered their first bear market. However, despite the low level of trading activity (blue line below), the number of active market participants (black line below) has remained stable. Although only about 45,000 out of 100,000 active buyers remain, the decline appears to be far less dramatic than the decline in volume.
The reason for this: a spread of NFT activities to other blockchains – namely Solana. Ethereum established itself as the ecosystem of “crypto OGs” with the corresponding financial means of profile pictures in the 6-digit minimum price range. Newer traders are more likely to choose Solana, a blockchain with lower transaction fees and an independent NFT ecosystem. So the mother of all smart contract blockchains remains unchallenged in terms of trading volume. But the gap between the individual NFT traders is closing more and more.
“Blue chips” still dominate
Not much has changed for the blue chip collections since the markets were last updated in June 2022. Bored Ape Yacht Club (BAYC) continues to lead the markets, closely followed by CryptoPunks from the same ownership house. The floor price of Bored Apes has fallen from 144 to 78 Ether (ETH) since May, which in combination with the collapse of the crypto markets corresponds to about -75% in USD. However, the NFT markets are currently experiencing a slight revival.
Four Yuga Labs projects (circled in red) made the top five. CryptoPunks was acquired by Yuga Labs in March and is currently in the top 10. The total sales of the NFT pioneers traded since 2017 were overtaken by Bored Apes just a few weeks ago, cementing the collection’s position as the undisputed no. one.
New NFT Marketplaces
Since December 2022, a large part of the trading volume has taken place on Blur, which claims to be the fastest trading platform. With nearly USD 98.5 million in NFTs deployed, the marketplace aggregator even overtook top dog OpenSea at the beginning of the year. The platform promises 10 times faster sweeps than competitor Gem, as well as savings on transaction fees.
An announcement on the Blur website is probably partly responsible for the success: all traders on Blur will receive an airdrop with the launch of their own token, which is based on the volume traded on the platform. So symbolic incentive still rules the roost.