Has the NFT market peaked?

As a promising emerging market, NFT global trading fever is fading, and this month also seems to show signs of a bear market – trading volume continues to decline. Unless there is a miracle in the trading volume in the last week of March, the situation can be saved, but this probability is just a good wish.

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Statistics from blockchain analysis firm Chainalysis show that so far, the average weekly NFT transaction volume in March is the lowest since last July (the month before the market really took off), compared with January and February. Compared with the previous month, the decrease was 49% and 54%.

Now there are different opinions as to whether the NFT market is brewing for a rebound or on the verge of collapse.

John Thetford, a 31-year-old retail investor who has been in the NFT market since last year, said:

“Many people flooded into this market after seeing the NFT price surge last year, but they didn’t see the profits they had hoped for.”

However, one thing is certain, as long as the monthly NFT transaction volume is the same as in March, the total transaction volume this year will exceed last year ($43 billion). This is largely reliant on transactions in the first two months of 2022 — January and February total NFT transactions alone cover half of last year’s, reaching $20.4 billion.

Not only did March’s transaction levels not match those of August last year when NFTs were just hot, other indicators also began to slow down. According to a report from NFT data firm Nonfungible, NFT market volume peaked on January 31 this year, and since then more than half of independent active buyers and sellers have left the market. As of the end of January 2022, the number of NFT sellers reached 21,296, while today there are only 7,210; on the other hand, the buyer situation is even worse, which has dropped from 28,207 in January to 7,894 today.

What caused this to happen?

Pedro Herrara, a senior blockchain analyst from DappRadar, said that tightening monetary policy and geopolitical uncertainty have created a certain risk aversion among NFT buyers, causing them not to linger in the market. He said:

“We can attribute the recent decline to: those already benefiting from NFTs looking to move their assets into safer, more liquid digital assets such as BTC, ETH and stablecoins during times of turmoil ).”

Indeed, we have seen both Bitcoin and Ethereum prices rise over the past 7 days, with gains ranging from 13% to 14%, respectively.

The analysis provided by the blockchain analysis platform Dune Analytics shows (as shown in the figure below) that the trading volume of some mainstream NFT trading platforms such as Open Sea, LooksRare and Magic Eden declined in the first half of March, but in the first two weeks rebounded. As a mainstream NFT trading platform, Open Sea’s trading volume began to drop sharply after February 19, due to hackers conducting cyber attacks via email on the same day, stealing a total of $1.7 million worth of NFTs from users. Fortunately, in the second half of March, trading volumes began to pick up again.

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When it comes to digital collectibles, avatar NFTs are the best performing segment. The market has rebounded since bottoming out on March 6, and as of Friday, its average daily sales price had rebounded to $6,296, a gain of 68%. The biggest winners of this increase are Azuki, Bored Ape Yacht Club (BAYC), World of Women and Doodles, all of which have floor prices in excess of $40,000. Pedro Herrara also added:

“Not all NFTs launched will end up being a success. Gone are the days of launching a visually appealing avatar project and trying to sell for $10,000. Teams also need to plan the entire project comprehensively. , and build out the utility of the project at each stage.”

When it comes to strategic development planning, the best thing to do in this regard is the BAYC project. After bottoming out at 68 ETH on March 7, BAYC has rebounded, and as of Friday, BAYC’s floor has rebounded to 103 ETH, according to data provided by NFTPriceFloor.com, although this figure is compared to its peak. It is still 15 ETH short, but it has already shown the extraordinary strength of the project.

Recent Global NFT Market Dynamics

1. On March 1, 2022, the world’s first NFT vending machine appeared on the streets of Manhattan’s financial district in New York City, USA. This vending machine was launched by Neon, a North American digital art collection platform, to popularize NFT art to the public. 

2. On March 15, 2022, Yuga Labs, the developer of BAYC, acquired the intellectual property rights of two other popular NFT series – CryptoPunks and Meebits. It is worth mentioning that on March 17, 2022, Yuga Labs also launched 10,000 of its own token, ApeCoin (APE), which will be distributed to BAYC/MAYC members through the claim page. On March 19, Yuga Labs posted a promotional trailer for a new project on Twitter, announcing the company’s plans to build an NFT-powered Metaverse in the next few years, garnering a lot of attention from social media users. On March 23, Yuga Labs announced that it had completed a $450 million seed round at a valuation of $4 billion, led by a16z. 

3. Another avatar NFT project, Lazy Lions, performed well. The project’s planning for creating a virtual world is very similar to BAYC. Ashura, co-founder of the project, said: “Our focus in the future is to build a trusted blue chip brand, not just focus on the small daily price fluctuations.” Ashur also pointed out that “recognized and culturally relevant Sex” is the key to Lazy Lions’ success in this market, and they have partnered with many top brands such as Coinbase, the Sacramento Kings and Puma. In addition, Ashur emphasized the importance of planning, not only to maintain the current state, but also to prepare for the future market opening, just like Coinbase launched the NFT platform and Meta founder Mark Zuckesrberg introduced NFTs to Instagram .

In fact, many people are not surprised by the recent decline in the NFT market, and the discussion on whether the NFT market has peaked can be summed up in eight words: the benevolent sees the difference, and the wise sees the wisdom.Some observers of the blockchain market believe that the recent decline does not mean that the NFT trend is over, the NFT market is still full of vitality, and the development prospects are far more than that; some market participants believe that the early market growth is too crazy, this time. A pullback may contribute to the long-term health of the market. All in all, everyone expects the NFT market to regain its lost ground in 2022 and reach a new round of subversion after a short period of calm. I believe this is not just a good wish, but a miracle will come soon.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/has-the-nft-market-peaked/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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