Nansen: Looking at short-term market trends from NFT mint data

The behavior of NFT minters can serve as a signal of short-term market trends. Using Nansen panel data, we explore trends related to NFT minting.

Summarize

Insights shared earlier by Chainalysis, observed that 20% of NFT minters realized profits from purchased NFTs during the Mint phase. While their report establishes the dominance of NFT minters, it prompts us to dig deeper into the behavior of NFT minters. Using data from the Nansen dashboard, we explore trends related to NFT minting. Our analysis shows that the behavior of NFT minters can serve as a signal of short-term market trends, just as we observe miners’ behavior as a proxy for Bitcoin’s price.

Data from the Nansen NFT Index and Market Trend Panel captures recent market downtrends, which are also reflected in the behavior of NFT miners. Our findings reveal the phenomenon that one out of 1 in 3 minted NFTs is traded above the floor price and minting cost. Likewise, one-third of NFTs end up as illiquid collectibles, with little trading activity after minting.

Understand the NFT market through NFT minter behavior

Nansen: Looking at short-term market trends from NFT mint data

Nansen: Looking at short-term market trends from NFT mint data

Over the past 30 days, we have seen a slight decline in the NFT market, with the Nansen NFT-500 (ETH) index down -5.23% in ETH and -0.89% in USD. Such a move is in line with the broader market, which is dominated by “risk aversion” amid expectations of rate hikes and the war between Russia and Ukraine. This sentiment is also reflected in the mint’s sales, 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.

Nansen: Looking at short-term market trends from NFT mint data

Starting in 2022, the amount of ETH used for minting will gradually decrease. When this trend was checked against Google Trends, searches for NFT topics declined, suggesting that interest in NFT topics may slow in the short term.

Nansen: Looking at short-term market trends from NFT mint data

However, if compared to 2021, NFT minters spend more ETH in both minting and transaction fees in 2022. Some notable NFT minting projects during this period include MAYC, Pixelmon, Meebit, and Lost Poets.

Nansen: Looking at short-term market trends from NFT mint data

A closer look at the data shows that the average minting cost peaked at 0.56ETH in May 2021, but fell to a low of 0.06ETH in June 2021. Since July 2021, the average minting cost of NFTs is between 0.07ETH and 0.1ETH. We hypothesize that a possible explanation for this phenomenon is that as more projects are introduced to the market, the competition for NFT minting increases, driving the average minting cost down. Between January 2021 and February 2022, we saw a more than 4,800% increase in the number of collectibles minted, from 39,802 collectibles to 197,086.

Nansen: Looking at short-term market trends from NFT mint data

Nansen: Looking at short-term market trends from NFT mint data

The cumulative increase in total NFT minting and transaction fee spending is likely due to an increase in the number of new NFTs participating in the market over time.

Nansen: Looking at short-term market trends from NFT mint data

Between 2021 and 2022, we observed a 2,000-fold increase in cumulative NFT minting and issuance projects in the NFT market, from around 500 NFT project parties at the beginning of 2021 to 1.2 million NFT project parties by the end of February 2022.

An overview of NFT minters

Nansen: Looking at short-term market trends from NFT mint data

Nansen: Looking at short-term market trends from NFT mint data

As a snapshot, we can see that most NFT minters spend up to 0.5 ETH for their minting. These minters who spent no more than 0.5 ETH accounted for around 10.7% of NFT minting.

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

Nansen: Looking at short-term market trends from NFT mint data

When analyzing monthly NFT Minters data, we observed that before 2022, NFT Minters spending between 10 and 100 ETH is the largest group of NFT Minters. 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, “whale” NFT Minters that spend more than 100 ETH appear to have decreased slightly.

Minting doesn’t mean profit

Nansen: Looking at short-term market trends from NFT mint data

We are curious what percentage of minted 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 minted NFTs were resold on the secondary market each month. However, since July 2021, the proportion of minted NFTs sold on the secondary market appears to be gradually decreasing.

Nansen: Looking at short-term market trends from NFT mint data

Nansen: Looking at short-term market trends from NFT mint data

When analyzing the profitability of minted NFTs, it shows that 1 in 3 minted new NFTs will not be traded again. On average, one-third of NFTs sold at a lower price than the cost of minting, and one-third of NFTs traded at a floor price above the cost of minting. However, when analyzing this trend, we see that over time, the proportion of minted NFTs that are in profit is increasing, while the proportion of NFTs that are dead collections is gradually decreasing.

When analyzing the monthly profits of top minted collectibles, we see a minimum average profit of around 4ETH, with a peak of 115ETH. As the chart above shows, the profits of top mint collectibles follow a fluctuating trajectory.

Finally, should I also mint NFTs?

Early access to NFTs by participating in minting should be carefully considered. When deciding whether to participate in NFT Mint, you should consider your own risk appetite. Comprehensive due diligence must be done on the potential project, such as the research community, its roadmap and the history of the founding team. For a more evidence-based approach, one can use the insights from Nansen’s NFT God Mode to examine transaction data for a specific item.

One can also utilize Mint Master to gather insights on what famous NFT minting gurus are doing and track smart money interactions on projects. While NFT minting may seem like a micro-level activity, understanding the macro outlook of the NFT market is critical. You can benefit from the Nansen Market Trend Dashboard; because understanding the broader macro trends can influence one’s prospects for minting NFTs.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/nansen-looking-at-short-term-market-trends-from-nft-mint-data/
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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