Will the market downturn obscure the value behind NFTs?

After the crazy NFT bull run in NFTs over the past year, many have been waiting for the bubble to burst. For now, these bizarre images are no longer able to sustain their high price of hundreds of thousands of dollars. The market is cooling down rapidly, and the glory days of NFTs are coming to an end.

Is it really?

The current macro situation of cryptocurrencies is severe – the entire industry chain is collapsing, a large number of capital is fleeing, and the industry leader CEX is filing for bankruptcy… But the data proves that NFT is stronger than other areas of the industry.

Data Display:

  • DeFi TVL drops 68%
  • GameFi’s trading volume drops 62%
  • NFT trading volume fell 41%
  • The amount of NFT financing also fell by 57%

However, when looking at the market as a whole, data is only the tip.

This report will summarize and analyze the overall data of the NFT industry in Q2 2022, including the overall situation of the NFT market, NFT investment and financing, and segmentation analysis of on-chain data performance. Key figures from star projects BAYC, CryptoPunk and Goblintown will also be tracked.

Q2 NFT Market Overall Overview

NFT trading volume in Q2 is in a downward range, down 41%

At the beginning of the year, the price of encrypted assets fell under the influence of policies, and investment funds were flowing into the NFT market as collectibles, game props and art carriers. This has driven unprecedented activity in NFT market transactions, hitting a record high of $8.6 billion in trading volume.

Many believe that this may increase the popularity of NFTs and pave the way for more Q2. However, in mid-May, the crypto market faced considerable challenges and the NFT market entered a cooling-off period. The transaction volume of NFTs opened higher and lower, falling from $19.02 billion in Q1 to $11.26 billion in Q2, a drop of 41%.

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Footprint Analytics – Volume of NFT Marketplaces

However, in terms of market value, GameFi Token has a positive correlation with the change in BTC market value, and the market value of GameFi Token has dropped by 76% from Q1 to Q2. And the emotional response of the NFT market is more “sluggish” than other areas. The NFT market tends not to respond quickly. From Q1 to Q2, its market value fell by only 39%.

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Footprint Analytics – GameFi Token MC vs BTC MC

Q2 NFT funding down 57% compared to Q1

Q2 NFT financing accounted for 8% of the total Q2 market financing, and Q2 NFT investment was $1.168 billion.Compared with Q1, a decrease of 57%. In terms of financing categories, the Gaming category has the highest amount of financing, followed by the Marketplace category.

The biggest change from Q1 to Q2 is the Metaverse-like NFT. The frenzied Metaverse investment boom of the past six months seems to have cooled since March. As can be seen from The Sandbox’s project data performance, building a virtual world is easier said than done. Therefore, many Metaverse related projects are still in the stage of hype concept.

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Footprint Analytics – NFTs Investment Funding Category Distribution

In terms of financing rounds, the seed round has the largest number, and the proportion of other rounds of financing is below 10%. However, from the perspective of independent NFT financing projects of each chain, Magic Eden, the Solana ecological NFT market, performed particularly well. In late June, it closed a $130 million Series B round, creating a rare breakout in a bear market for NFT financing. 

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Footprint Analytics – NFTs – Funding Rounds in Q2

Data performance of NFTs on Ethereum, Polygon and Solana

According to Footprint Analytics, the total transaction volume of NFTs in the Ethereum ecosystem accounts for more than 80% of many public chains. Moreover, Ethereum has the most NFT projects, and the clustering effect of head projects is obvious, including projects such as BAYC, Otherdeed and CryptoPunks.

  • On-chain NFT transaction volume comparison

Judging from the NFT transaction volume on Ethereum, Polygon and Solana, Q2 decreased by 60% compared to Q1’s NFT transaction volume. Ethereum is still the most prosperous and most transactional on-chain ecosystem of NFTs, but high gas fees and congestion problems are still the shortcomings of Ethereum.

Therefore, Solana and Polygon are not far behind in the NFT industry. Especially after OpenSea introduced projects on the Solana chain, Solana’s transaction volume increased by 12% in Q2 compared to Q1. This will be the latest contender to challenge Ethereum’s NFT crown.

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Footprint Analytics –  Monthly NFT Volume by Chain

  • NFT trading volume comparison of trading platforms

After entering the second quarter, especially in June, the market for NFT transactions is no longer the only one that is dominated by OpenSea.

X2Y2 has begun to shake OpenSea’s supremacy. Like LooksRare, it is an emerging NFT trading platform that began to challenge OpenSea in the early days. They went straight to the pain points of OpenSea’s centralization, platform revenue irrelevant to users, high handling fees and unissued tokens, and gradually divided OpenSea’s position in the NFT trading market.

The Magic Eden trading platform has also gradually emerged, opening the gate for Solana NFT and enriching the NFT multi-chain trading market.

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Footprint Analytics –  Monthly Market Ranked by Volume

  • Active users of the NFT marketplace

Charts from the trading platform show that OpenSea’s competitor, LooksRare, introduced incentives that helped it gain some market share, but the move didn’t lead to significant user numbers. Most NFT users are still active on OpenSea, and the average daily active users during Q2 exceeded 50,000+.

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Footprint Analytics – Daily Market Ranked by Volume(USD)

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Footprint Analytics –  Marketplace Daily Active User

  • Data about NFT buyers and sellers

If there are more sellers than buyers, it’s a sign that people are selling their assets. If there are more buyers than sellers, there will be more newcomers who want to enter the NFT ecosystem than those who want to sell assets.

Therefore, the data shows that after the bear market setback, the number of new NFT users in the second quarter was lower than that in Q1.

YTcykHJlEFRD6lEU1dZEU6sEUE3LG7D3wJKkKfga.png

Footprint Analytics –  Buyers & Sellers

Notable NFT projects this season

  • BAYC’s transaction volume and Floor Price have repeatedly surpassed CryptoPunks

Since the rise of BAYC, a rivalry between it and CryptoPunks has been brewing.

Over the years, Punks has been known as a preeminent “blue chip” NFT asset due to its long history and dedicated community. However, as BAYC development team Yuga Labs acquired the intellectual property rights of CryptoPunks and Meebits in Q1, and launched the Otherdeed sales campaign for the Otherside virtual plot. The NFT transaction volume and Floor Price, which drove the BAYC series, once again saw a huge increase, beating CryptoPunks repeatedly.

With the collapse of the Crypto market, investors’ demand for NFTs also declined correspondingly, which greatly affected its overall transaction volume and price decline. As you can see from the chart, both Bored Ape Yacht Club and Cryptopunks have seen their volumes and floor prices decline after mid-May.

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Footprint Analytics –  Bored Ape Yacht Club vs Cryptopunks Volume

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Footprint Analytics –  Bored Ape Yacht Club vs Cryptopunks Floor Price

  • Emerging Project – Goblintown

The market downturn has not stopped new NFT projects from emerging.

Goblintown is composed of a group of ugly and absurd Goblins avatars, and it has become a new NFT project in the second quarter. The initial minting started on May 21, and 9999 spiky-eared fairy avatars were distributed to NFT players for free. Users only need to pay the gas fee on the chain. The project quickly attracted market interest. On June 1, the daily trading volume was as high as $11 million, and the market capitalization was as high as $127 million.

Compared with BAYC, Goblintown’s sense of rebellion through differentiation and secondary interpretation also has a little artistry. But judging from the market value and transaction volume, the king of NFTs is undoubtedly BAYC.

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Screenshot source – goblintownwtf collection

in conclusion

The NFT market has entered a cooling-off period following the cryptocurrency market, and the prices of some top projects are still relatively stable, and new projects are still emerging in the second quarter. In other words, the current downward pressure has brought down the entire industry chain, several venture capital firms, and several CEXs, but it has not caused the implosion of the NFT market.

This means that although the price of NFTs is still on a downward trend, there is little chance of the NFT bubble expected by the public. Even if there is a bubble, NFTs will be the smallest of all crypto bubbles.

This article is contributed by the Footprint Analytics community

The above content is only personal opinion, for reference and communication only, and does not constitute investment advice. If there are obvious misunderstandings or data errors, feedback is welcome.

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The Footprint Community is a global, mutually supportive data community where members use visual data to co-create powerful insights. In the Footprint community, you can get help, build links, and exchange learning and research about Web 3, Metaverse, GameFi, DeFi, and other blockchain-related topics. Many active, diverse, and highly engaged members inspire and support each other through the community, and a worldwide user base is established to contribute data, share insights, and advance the community.

Data Source: Footprint Analytics – NFT Q2 Report

PDF version of the report: https://footprint.cool/Jvz3

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/will-the-market-downturn-obscure-the-value-behind-nfts/
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