The hype around non-fungible tokens (NFTs) has created an endless number of new projects in 2022. After the various collapses in the industry, many of these digital images found no buyers. The majority of NFT collections experienced the first bear market - what's next?
From the high in August 2021 with nearly $2.8 billion in trading volume in 30 days, NFT markets have settled around $100 to $200 million in traded value per month. Of this, about 80% is for Ethereum-based NFTs, followed by 12% dominance of competitor Solana. The rest is split among Polygon and other 9 blockchain platforms. The picture of a bear market is clear and distinct.
Behavior in the NFT bear market
While the newly launched Metaverse collection of the Bored Ape founders was achieving hundreds of millions of dollars in sales per day in early May, this volume quickly disappeared. The NFT markets entered their first bear market. However, despite the low trading activity (bottom blue line), the number of active market participants (bottom black line) remains stable. Although there are only around 45,000 active buyers left out of 100,000, the decline seems far less dramatic than the nosedive of the volume.
The reason for this is the spread of NFT activities to other blockchains, specifically Solana. Ethereum established itself as the ecosystem for "crypto-OGs" with the corresponding financial means for profile pictures in the six-figure minimum price range. Newer traders, however, chose Solana, a blockchain with lower transaction fees and an independent NFT ecosystem. As a result, the mother of all smart contract blockchains remains unchallenged in terms of trading volume. However, the gap between individual NFT traders is gradually closing.
"Blue Chips" continue to dominate
The reason for this is the spread of NFT activities to other blockchains, specifically Solana. Ethereum established itself as the ecosystem for "crypto-OGs" with the corresponding financial means for profile pictures in the six-figure minimum price range. Newer traders, however, chose Solana, a blockchain with lower transaction fees and an independent NFT ecosystem. As a result, the mother of all smart contract blockchains remains unchallenged in terms of trading volume. However, the gap between individual NFT traders is gradually closing.
"Blue Chips" continue to dominate
Since the last market update in June 2022, not much has changed for the Blue Chip collections. The Bored Ape Yacht Club (BAYC) remains at the top of the market, closely followed by the CryptoPunks of the same owner. The floor price of Bored Apes has dropped from 144 to 78 Ether (ETH) since May, which, combined with the crypto market crash, represents around -75% in USD. However, the NFT markets are currently experiencing a small resurgence.
In the top five ranks, four Yuga Labs projects (circled in red) have been maintained. The CryptoPunks were acquired by Yuga Labs in March and currently rank in the top 10 as well. The total turnover of the NFT trailblazers traded since 2017 was recently overtaken by the Bored Apes, further solidifying the collection's position as an undisputed number one.
New NFT marketplaces
Since December 2022, a significant portion of the trading volume has been taking place on the allegedly fastest trading platform Blur. With just under 98.5 million USD in NFTs traded, the marketplace aggregator even overtook the market leader OpenSea at the beginning of the year. The platform promises 10x faster "sweeps" (the buying of the cheapest editions of a collection) compared to its competitor Gem, as well as savings on transaction fees.
An announcement on the Blur website may be partially responsible for its success: with the introduction of its own token, all traders on Blur will receive an airdrop based on the traded volume on the platform. Token incentivization continues to rule the space.
