Are NFTs dead?Dive into NFT market data

In recent months, sales and commodity prices in the NFT industry have fallen sharply across the board. Still, activity in the NFT space is high, and it would be wrong to say that NFTs are dead, especially if we consider that Blur is the most active NFT market, with volume growth of over 100% in February and other indicators that show NFTs are here to stay .

There is a growing debate about the sustainability of the NFT market and whether it is just a fad or a viable long-term investment. Some see NFTs as a bubble waiting to burst, while others believe they are here to stay and will revolutionize how we think about ownership and authenticity in the Crypto world.

Related: What Are NFTs, and How Do They Work?Non-fungible tokens explained

In this post, we’ll explore the current state of the NFT market, examine what could aid recovery, and try to answer the question on everyone’s mind: Are NFTs dead?

How did we get here?

In January last year, the NFT transaction volume of OpenSea, the world’s largest NFT market, reached US$4.87 billion. At the time, the hype surrounding NFTs was at an all-time high, with mainstream celebrities like Eminem and Jimmy Falon backing the Bored Ape Yacht Club (BAYC) NFT and other NFT projects.

After reaching a peak of $4.87 billion in the first quarter of 2022, NFT transaction volume on OpenSea has experienced an extreme decline.source

The market frenzy has led to wild valuations for some NFTs, such as Beeple’s Crypto photo collage selling for more than $69 million and Pak’s “clock” selling for $52 million. Now, about a year later, the situation is completely different, with no NFTs selling 7 figures or more in the past month (the highest selling NFT during that period was Bored Ape Yacht Club #5116, which sold for $693,000 worth of ETH).

The biggest reason for the drop was a fall in the broader cryptocurrency market, with bitcoin, ethereum and most other Crypto assets down double digits from their November 2021 peak. NFTs have been hit especially hard, as many non-cryptocurrency folks have been disappointed by NFTs and don’t see a concrete reason why NFTs and some other projects have reached sky-high valuations.

Additionally, many smaller projects have been pulled by their creators, leading to baseless accusations that all NFTs are scams and not worth investing in. All in all, the combination of a cryptocurrency bear market and plunging NFT sales creates a particularly bearish environment.

However, with Crypto assets showing clear signs of recovery recently and Bitcoin reaching a nine-month high following encouraging inflation news, NFTs are also starting to move in a positive direction.

Are NFTs dead?Dive deeper into NFT stats

The most objective way to gauge the health of the NFT industry is to look at various transaction data to understand how much buying and selling is happening in the Crypto collectibles market. This allows us to examine the current state of the NFT market and compare it to its historical performance.

NFT volume more than doubled to $2 billion in February

NFT volume more than doubles to $2 billion in February 2023

NFT trading volume soared to $2 billion after failing to exceed $1 billion in the past seven months.Source: Dapp Radar

After months of declining transaction volumes, the trend reversed in January, rising 38.5% from the previous month. Transaction volumes soared even more in February — reaching $2 billion, a 111% increase from the previous month.

According to NFT and DeFi analytics firm Dapp Radar, the growth was driven by Blur, a new marketplace that has taken NFTs by storm in recent months. We will discuss blurring in more detail in the next section.

Interestingly, despite the increase in sales, the number of transactions increased in February, with sales falling from 9.2 million in January to 6.3 million in February. This means that the average selling price of traded NFTs has increased to explain the large increase in transaction volume.

NFT trading volume in major markets

In January 2022, $5.5 billion worth of NFTs changed hands on OpenSea and other major marketplaces.source

While February’s surge is definitely impressive, total volumes are still a far cry from the record month set in January 2022, when more than $5.5 billion worth of NFTs were traded across major NFT markets.

Top NFT Chains: Ethereum Takes the Lead, Solana Comes in Second

When NFTs first became popular, Ethereum was basically the only viable chain for issuing and trading NFTs. However, high transaction costs and low throughput have left many Crypto collectors and artists looking for a faster and most importantly cheaper solution.

Top Blockchains by NFT Trading Volume

Ethereum has an insurmountable lead over other blockchains in the NFT field.Source: Dapp Radar

Several other chains have emerged to fill this role, but none have been as successful as Solana, which has one of the highest TPS in the industry, and transaction costs of just fractions of a cent (compared to Ethereum’s Costs will average approximately $40 from January 2021 to May 2022).

Still, ethereum clearly enjoys a first-mover advantage, as Dapp Radar data shows that ethereum had a transaction volume of $1.8 billion in February. The second most active chain is Solana, accounting for $75 million. Despite the large gap between the two, Magic Eden and other top Solana NFT marketplaces have grown in popularity recently.

Blur overtakes OpenSea in deal volume

The Blur NFT marketplace launched in mid-October 2022 and quickly started gaining traction with NFT collectors and traders. However, it wasn’t until February that the marketplace took off, surpassing OpenSea as the largest NFT marketplace.

The reason for the surge in February was the airdrop of BLUR tokens. BLUR is airdropped to loyal Blur users, meaning only those users who exclusively use the Blur marketplace to list NFTs will be eligible for the maximum airdrop amount. This clearly incentivizes NFT users to choose Blur over OpenSea and other marketplaces that do not have similar incentives.

NFT volume OpenSea and Blur

Blur has become the largest NFT marketplace in recent weeks.source

It’s hard to gauge how much BLUR’s launch has affected the broader NFT market, but the uptick in trading volumes clearly coincided with the token’s launch.

Why NFTs will become more popular in the future

While NFTs are mostly known for being used for expensive profile pictures, the potential of NFTs is much greater as they can be used for a variety of purposes in different fields, including Crypto art, music, games, and more. Here are a few reasons why NFTs could recover and become more popular in the future:

  • Infrastructure Development: As the technology behind NFTs continues to improve and become more accessible, it can attract more investors and buyers into the market.
  • Scarcity: NFTs are unique and cannot be copied, which makes them inherently scarce. As more and more people want to own a particular NFT, the price may increase due to the limited supply.
  • Diversification: NFTs offer a unique opportunity to invest in Crypto assets, a relatively new and unexplored field. When investors seek to diversify their portfolios, they may consider NFTs as part of their investment strategy.
  • Growing adoption: NFTs have received a lot of attention in recent years due to growing interest in Crypto art and collectibles. However, the gaming space and other uses are still relatively untapped, but could provide a huge boost for NFTs in the future.
  • Growing acceptance: More and more mainstream artists and brands are starting to create and sell NFTs. Increased acceptance could lead to more people buying and trading NFTs, driving up their value.

While there is no guarantee that NFTs will recover in the future, the above factors point to the potential for growth in the NFT market. However, as with any investment, it is important to be aware of the inherent risks, which are more pronounced in emerging assets such as NFTs. At this point, we’ll just have to wait and see.

Bottom line: No, NFTs aren’t dead — but they’ve been on a clear decline

After May 2022, NFT trading volumes plummeted for various reasons, but mostly due to the broader crypto winter. As the cryptocurrency market showed renewed bullish activity in the first quarter of 2023, NFT activity saw a massive spike, with trading volumes reaching $2 billion in February, up from $946 million in the previous month.

Anyway, it would be an exaggeration to say that an industry that clears $2 billion in trading volume per month is dead. However, it is undeniable that the NFT field is still far from the peak of popularity in late 2021 and early 2022.

If you want to read more about NFTs, check out How The Merge NFT Raised Over $90,000,000 and Became the Highest Grossing NFT Series Ever, or our article on How Logan Paul Spent $623,000 on an NFT Now Worth Just $10 .

Information source: compiled from COINCODEX by 0x information.Copyright belongs to the author, without permission, may not be reproduced

Related Posts

Blockchain will save financial institutions $10 billion by 2030

Financial institutions could save $10 billion in international transactions through fast, reliable and transparent settlement through blockchain. A study by Ripple and the Payment Acceleration Council shows this. Some 300 financial professionals from 45 countries participated in the survey. Of these, 97%…
Read More