NFT sales market on track to top 2021, but monthly totals are down

NFT sales are poised to soon surpass last year’s total, but monthly declines since the start of 2022 are troubling for the once-bloated market.

Total sales hit $37 billion as of the first week of May, according to a report by blockchain analytics firm, Chainalysis, compared to $40 billion for all of 2021. If sales maintain their median weekly total since January, total NFT sales could double to $90. billion by the end of 2022.

Yet total sales continue to decline month-over-month year-to-date, with an average drop of 19.8% each month from January to April, while year-to-date, the values ​​of most NFTs are falling.

Both trends are occurring as the Federal Reserve tightens the money supply, reducing investors’ appetite for risky assets such as cryptocurrencies.

“The market is not at all-time highs, but we are seeing a strong volume of transactions as well as an increase in the number of active collections and buyers [active wallets] that interact with NFT markets,” Ethan McMahon, the Chainalysis economist who authored the report, told Yahoo Finance.

Social NFTs hold up better

The vast majority of the 88,000 NFT collections have not held their value since January 1.

“Social NFTs have rallied nicely from their March lows, while other [NFT] sectors are not doing so well,” Martin Lee, a data reporter at blockchain analytics platform Nansen.AI, told Yahoo Finance.

Nansen breaks down NFT performance by segmenting collections through indexes based on their category, such as art, games, metaverse, and social.

An investor who invested $1,000 in their NFT 500, which weights the top 500 NFT collections by market capitalization, on Jan. 1 would have lost 6.7% or $67 by Sunday afternoon, according to Nansen data. The same goes for the firm’s NFT metaverse index (Meta 20).

However, Nansen’s art (Art 20) or game (Game 50) indices fared much worse. Investors investing $1,000 in the top 20 and 50 art and game collections reportedly saw their portfolio value drop 51% to $490 for art and 61% to $390 for games.

On the other hand, social NFT collections such as Bored Ape Yacht Club (BAYC), which are most often profile picture avatars aimed at serving as keys to gated online communities with benefits, have fared better – rising 5.52% since the start of the year.

A representation of the Ethereum cryptocurrency is seen next to non-fungible tokens (NFTs) from Yuga Labs’ ‘Bored Ape Yacht Club’ collection displayed on its website, in this illustrative photo taken March 24, 2022. REUTERS /Florence Lo/Illustration

Choosing winners?

While admitting that new buyers aren’t clamoring for the NFT space “just yet”, Farokh Samad, an avid NFT collector who bought his first unique token in February 2021, isn’t discouraged by the trajectory of the market. .

“When you compare NFTs to bitcoin, you’re missing the point,” Samad told Yahoo Finance. “This year it’s a market of nearly $40 billion and there’s a lot going on. It’s easy to dismiss the big picture.

Samad has at least 993 NFTs, according to his collection page on Open Sea, which means his holdings are larger than most. The 27-year-old is also part of Anchain.ai’s “Million Dollar Club”, which overlaid open source data from Twitter and Ethereum Name Service (ENS) to identify a list of 271 Twitter accounts linked to ENS addresses. who hold at least $1. million in crypto and NFT.

To pick NFTs that increase in value over time, Samad told Yahoo Finance, sometimes it’s just “low IQ games,” like having a good idea for a project or liking art. But since March, when the market has become less robust, Samad said it’s more important to look for projects that are “deeply engaged with their community and consistently delivering products” such as more digital events, merchandise or goods. .

Open Sea, the largest NFT marketplace by volume, saw its record daily trading volume ($467 million) between Saturday, April 30 and Sunday, May 1, largely thanks to a virtual land sale hosted by the creator from BAYC, Yuga Labs, which was so important. , it temporarily crashed the Ethereum blockchain.

While Samad, who participated in the Otherdeeds sale, said there was not much information about the value of these virtual plots of land yet, he said it was clear that some plots are worth more. than others based on a 1-5 star tier system.

“Things are a little fragile in the short term, but the crazy thing about this space is that one thing could knock it down, bring it up,” Samad said.

In his opinion, the head of Instagram, Adam Mosseri, said in a social network Publish On Monday morning, the social media platform will begin testing NFTs with selected creators. If the integration is successful, it could attract a new group of investors and NFT users, according to Samad.

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David Hollerith covers cryptocurrency for Yahoo Finance. follow him @dshollers.

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