NFTs continue to thrive despite crypto slump
Leading Ethereum NFT marketplace OpenSea experienced one of its finest months on record in January. Despite coming under fire for errors leading to traders losing funds and the increasing charge of new Ethereum marketplace LooksRare, OpenSea posted over $4.5 billion in NFT sales volume in the last 30 days. Further showing the appetite for NFTs is healthy while crypto prices move sideways.
Despite the impending attack of LooksRare and alternative marketplaces on networks like Solana and Tezos, OpenSea is still in a dominant position. The NFT marketplace carved out its first-mover advantage in the space some time ago and hosts the most sought after collections.
In January, the total sales volume for NFTs as tracked by DappRadar surpassed $15 billion, with more than $10 billion accounted for by LooksRare. However, as reported over the last two weeks, the trading volume in LooksRare is the result of artificial trading incentivized by LOOKS token rewards.
In 2021, the NFT market exploded, generating $25.8 billion in trades, 18,400% more than the four previous years combined. And the first 31 days of 2022 confirmed that NFTs are gaining even more momentum. Spending on NFTs is at the same level in January 2022 as in August 2021 and shows no signs of slowing down.
Moreover, research by centralized trading platform crypto.com and the World Bank shows that crypto adoption is now on par with Internet adoption regarding total users. Arguably many of these new users are entering through NFT collections and play-to-earn dapps. More visual platforms lure people to web3 and services they want to know about.
A new frontier
The popularity of NFT assets is growing more than ever. For the first time, searches for the term “NFT” are outpacing those for “crypto.” Plus, increased interest from Asia is promising. A market dominated by North American and European users will now welcome an Asian NFT audience.
These figures are largely driven by celebrities and big brands’ involvement in the NFT world. Stars with a massive social reach like Neymar Jr. (+200M followers on Twitter and Instagram) and Kevin Hart (+192M followers on Twitter and Instagram) have publicly announced their recent entries into the Bored Ape Yacht Club (BAYC), one of the premiere NFT projects.
Compounding this, Twitter, perhaps the most popular social media platform across crypto and NFT enthusiasts enabled its first web3 functionality inside the social platform in January 2022. Social media platforms Instagram and Facebook are expected to follow.
Notably, It’s not just Ethereum NFT collections that are getting attention right now. The entire NFT landscape is seeing a lift. Partly driven by what can be described as a fire sale on NFTs, most priced in native tokens such as SOL, ETH, and BNB, which have lost around 50% of their value in a few months. Secondly, investors are gravitating toward blue-chip NFT collections like CryptoPunks, World of Women, and BAYC as stores of value with the potential to beat BTC and ETH regarding percentage gains during a bear market.
Most interesting to this writer is that we can no longer bundle NFT and crypto traders into the same baskets. A new asset class has been born with its communities, following, and demands. Arguably, adding a visual element to crypto is what has opened the floodgates to the general public. However, most serious crypto traders are not partaking in NFT ownership or flipping, while at the same time, most intense NFT collectors are not yield farming or leveraging synthetics. Two very different communities are developing, and it is fascinating to observe.
The above does not constitute investment advice. The information given here is purely for informational purposes only. Please exercise due diligence and do your research. The writer holds ETH, BTC, AGIX, HEX, LINK, GRT, CRO, OMI, IMMUTABLE X, GALA, AVASTR, GMEE, CUBE, RADAR, FLOW, FTM, BNB, SPS, WRLD, ATOM, and ADA