In 2021, users sent at least $44.2 billion worth of cryptocurrency to ERC-721 and ERC-1155 contracts, the two types of Ethereum smart contracts associated with NFTs, which are bought and sold on specialized exchanges.
According to data from a Chainalysis report, value and average trade size increased in 2021, suggesting that NFTs as an asset class are gaining in value as they attract new users.
The entry of players like Bored Ape Yacht Club and Cryptopunk NFT has taken the NFT euphoria to the next level. NFTs, like other crypto assets, can be stored in both custodial and non-custodial wallets.
Commenting on the report, Anshul Dhir, COO and co-founder of EasyFi Network, said the report suggests a surge in NFT transactions with few localized spikes due to specific popular NFT collections.
“The NFT market has seen massive growth in 2021, in terms of crypto trading volume, but it will not be constant in 2022,” he added. “The year started with bearish sentiment around the world and that could have contributed to a slowdown.”
The vast majority of NFT transactions occur at the retail level, i.e. below $10,000 worth of cryptocurrency. As we see above, larger NFT transactions are becoming more common.
According to market participation, NFT holds great potential for retail investors, who don’t want to miss the bus. The majority of purchases should be led by retail investors rather than institutional investors.
Vijay Pravin Maharajan, CEO of bitsCrunch, said there is no doubt that the NFT trade is more of a retail trade, given that many NFT collections present themselves as unique and distinctive collectibles.
“Metaverse applications such as virtual shopping streets are also linked to this retail element for NFTs, with their compatibility and customizable nature being key factors,” he added.
Mixed trends were seen across multiple regions, with South Asia, North America, Western Europe and Latin America leading the pack. However, no region has accounted for more than 40% of monthly web visits since March 2021.
According to statistics, Southeast Asians make up the majority of NFT users. The Philippines, Thailand, and Malaysia top the list, with India not far behind with many celebrities flocking to the NFT space.
Southeast Asia is at the forefront of the NFT trend, EasyFi’s Dhir said. “There have also been some interesting projects in India that are all about NFT.”
The data shows that the number of active NFT collections has increased sharply, especially in the second half of the year. After a slight dip in early November, growth resumed and continued until the end of the year.
The number of active NFT collections was 3,264 at the end of 2021, its highest figure yet, compared to just 193 at the start of March.
The momentum is on the upside in a very favorable way. The general trend in countries with a high rate of NFT collection is directly proportional to the degree of public awareness, said bitsCrunch’s Maharajan.
“People are usually hesitant to invest in something they don’t know about, but they will undoubtedly earn more if their level of awareness increases,” he added.
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