Multi-picture warning: Don’t follow the trend, one-third of NFTs will be rotten in your hands

The behavior of NFT Minter (minters) can be regarded as a signal of short-term market movement, just as we observe the behavior of miners as a basis for Bitcoin price. Through Nansen’s data, we found some trends regarding NFT minting. Data from Nansen’s NFT Index and Market Trends captures the recent downtrend in the market, which is also reflected in the behavior of NFT Minter. Our findings shed light on the phenomenon that a third of already minted NFTs have a floor price higher than their initial minting cost. Likewise, one-third of NFTs end up rotten in their hands, with little to no trading activity after minting.

Understand the NFT market through the behavior of NFT Minter

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(NFT market trend in the past 30 days: February 20 to March 21)

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(NFT market trends based on minting volume: January 2021 to February 2022)

Over the past 30 days, we have seen a small correction in the NFT market, with the Nansen NFT-500 (ETH) index down 5.23% in ETH terms and 0.89% in USD terms. This movement is in line with the general trend of the market: the market is anticipating higher interest rates and the war between Russia and Ukraine, and the market sentiment is mainly safe-haven. This sentiment is also reflected in minting volumes, which have declined over the past 30 days. While the Nansen NFT-500 Index reflects this market sentiment, we can also observe this trend through the behavior of NFT Minters.

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(NFT Minter spends ETH on minting and gas)

ETH spent on minting NFTs is gradually decreasing since 2022. Contrasting this trend with Google Trends, you can see that searches for NFTs are also declining, suggesting that public interest in NFTs may slow in the short term.

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(Google Trends with NFT as the keyword)

However, we noticed that NFT Minter spent more ETH on minting and gas this year compared to the previous year (2021). During this period, there were some well-known NFT minting, including MAYC, Pixelmon, Meebit, and Lost Poets:

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(The table from left to right is the name of the NFT collection, the NFT minting time, and the ETH cost of NFT minting)

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(NFT casting average cost trend)

Further research data shows that the average minting cost peaked at 0.56 ETH in May 2021, but fell to a low of 0.06 ETH in June 2021. Since July 2021, the average minting cost of NFTs is between 0.07 ETH and 0.1 ETH. We hypothesize that a possible explanation for this phenomenon is that as more and more projects are introduced to the market, competition for NFT minting increases, thereby driving down the average minting cost. From January 2021 to February 2022, we saw a more than 4,800% increase in the number of mints, from 39,802 to 1,970,886.

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(spend on NFT minting and number of independent collections minted)

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(Independent NFT Minters and Collection Time)

The increase in NFT minting and total gas spending is likely due to the growing number of independent NFT Minter participating over time.

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(The accumulation of NFT Minter quantity)

We observed that between 2021 and 2022, the cumulative number of NFT Minter in the NFT market increased by a factor of 2,000, from about 500 at the beginning of 2021 to 1.2 million at the end of February 2022.

NFT Minter user profile

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(Mining cost distribution of NFT Minter)

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(The amount of ETH spent on NFT minting sorted by NFT Minter’s spending)

We can see that most NFT Miners spend up to 0.5 ETH in fees for their NFTs. These minters, which cost 0.5 ETH, account for about 10.7% of the NFT minting volume.

The NFT minters that dominate the minting volume are those who spend 10 to 100 ETH, and they account for about a third (32.6%) of the total minting volume.

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(Cumulative minting cost of NFT Minter)

When analyzing the basic situation of NFT Minter every month, we found that before 2022, the NFT Minter group that spends 10 to 100 ETH accounts for the largest proportion. However, since December 2021, the trend has reversed, with NFT Minters spending between 1 and 5 ETH being the most representative. On the other hand, “whales” NFT Minters spending more than 100 ETH appear to have decreased slightly.

Minting does not imply guaranteed earnings

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(The dark side of minting NFTs – most NFTs are never sold)

We would love to know what percentage of NFTs are recirculated and traded on the secondary market. Our data shows that from January 2021 to February 2022, an average of 44.8% of NFTs minted each month were resold on the secondary market.

However, from July 2021, the proportion of NFTs sold on the secondary market appears to be gradually decreasing.

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(Proportion of NFTs traded in the secondary market)

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

(NFTs that are in profit, loss or already in a “dead” state)

When analyzing the profitability of minted NFTs, the report shows that, on average, one out of every three NFTs minted turns into a “dead collection” (rotten in the hand) with little or no trading activity. On average, one-third of NFT floors are priced below the casting cost, and a third of the NFT floors are priced above the casting cost. However, over time, we see that the proportion of profitable NFTs increases over time, while rotten NFTs gradually decrease.

Multi-picture warning: Don't follow the trend, one-third of NFTs will be rotten in your hands

What if the minted NFT is in good condition? (Profit for top collectibles minted each month)

When we analyze the monthly profits of the top minting collections, we can see that the smallest average profit is around 4 ETH, and the peak is 115 ETH. As the chart above shows, the top favorites’ profit trajectory is volatile.

Bottom line: what kind of NFTs should we mint?

Becoming an early participant in NFTs by participating in minting is a matter of careful consideration. When deciding whether to participate in NFT minting, you should consider your own risk appetite. Thorough due diligence on potential projects is critical, such as researching the community, their roadmap and the history of the founding team.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/multi-picture-warning-dont-follow-the-trend-one-third-of-nfts-will-be-rotten-in-your-hands/
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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