While the entire crypto market is going through a historic bear market, the last quarter has also brought about a dramatic shift in the NFT market. Liquidity is declining and dollar prices are highly affected by the depreciation of the cryptocurrency. However, there is a long-term trend behind it.
Anyone who entered the NFT market a few months ago expecting to buy and resell it at a profit will likely be disappointed. After a year of booming in the industry, many of the promises appear to be either late or non-existent. The world has not yet turned into a metaverse, our digital IDs are not NFTs, and above all, not all NFT holders have become millionaires – the disappointment seems overwhelming. However, as is often the case in financial markets, tides follow tides, and the joy of NFTs has brought millions of new users to the blockchain ecosystem.
NFTs haven’t gone away, just the spotlight
The amount of internet searches on NFT has dropped significantly since it peaked in January 2022. However, the numbers should be treated with caution. It can be seen that interest has dropped back to September 2021 levels. At that time it was the “golden age” for the entire region around NFTs. The Metaversum and Utilities sectors saw sharp increases in their activity in terms of the number of sales and dollar volumes traded, which may seem paradoxical in the context of a bear market.
On the one hand, this can be done by selling OtherDeed to OtherSide (das Metaverse by Yuga Labs) and on the other hand, by the sudden mania of four-character domain names on the Ethereum Name Service. Apart from these two segments, which are developing surprisingly well in this market context, almost all indicators are down. Southeast Asian countries continue to show the greatest interest. Interestingly, some Middle Eastern and African countries are starting to appear in the top 20: Lebanon, Nigeria and the United Arab Emirates. In Europe, only the Netherlands and Switzerland are on the list Quarterly reports from NonFungible.
Games and collectibles now account for 2/3 of the total market and continue to occupy a leading position in terms of the number of sales and the volume of communities. From an income statement standpoint, the technical segment is seeing higher resales for the first time, with a loss of about $5 million in the most recent quarter. The Collectibles segment, which posted the largest decline (-16%), remains profitable overall with a gain of $265 million. Given the trend over the past few weeks, expect this rate to pick up and reverse over the next quarter. The average holding period fell below 30 days in the two strongest tranches of the last quarter.
Ethereum is regaining momentum
The primary beneficiary of NFT adoption is the smart contract platform Ethereum. The blockchain network supports a wide range of applications powered by “smart contracts” (Smart contracts) maybe. As a result, Ethereum favors decentralized autonomous organizations (DAOs), diversified applications (dApps), and decentralized financial applications (DeFi) and non-fungible symbols (NFTs) as well as the open Metaverse. In fact, besides memecoins, NFTs are the only app that has ever made it into the mainstream.
About 10,000 new users enter the Ethereum ecosystem daily to trade in NFTs; With an average of 300,000 active addresses per day across the entire dApp landscape, this is an impressive number. This is supported by other metrics that identify NFTs as the primary driver of crypto adoption over the past year. It’s obvious: collectibles are more deeply ingrained in our popular culture than financial apps, which for the majority of people are seen as boring and sloppy.
“We think there are some major drivers for that [Ethereum-]gives growth. The first is about attracting the digital native generation. NFTs bridge the many gaps between the traditional world and the new world – physical and digital, consumer and crypto world. Everyone enjoys holdings in the field that interests them.” – Charles D. Hussey, Managing Director ConsenSys; The company behind MetaMask is the leading Ethereum wallet
Unbeaten NFT trading volume
Over 6 million Ethereum addresses contain at least one NFT. There are about 77,000 NFT pools and 111,000 NFT smart contracts, but only some of them are actively trading. The Blue NFT chips (BAYC, CryptoPunks, etc.) lived up to their name and, in addition to the coin losses, almost managed to keep their price lower in Ether (ETH). With nearly 40 million daily trading volume, Ethereum remains the market leader for NFTs.
In addition to Ethereum, competitor Solana and scaling solution Polygon have also managed to accumulate a significant NFT community. Some well-known Solana NFTs such as DeGods, Solana Monkey Business, OkayBears, and Founders Coin have daily trading volumes as low as millions. In the inexpensive blockchain, there are currently about 47,000 NFT pools and nearly 21 million non-fungible tokens, which reside in more than 2.2 million wallets.
On the Ethereum sidechain Polygon, crowd-friendly NFTs seem to be finding their whereabouts. With nearly 17 million wallet addresses, more than half a billion low-cost transfers have already been executed. The 236,000 NFT smart contracts have generated over 168 million different digital assets, with a meager $500,000 daily volume attesting to the rather cheap supply.