Has the NFT Market Peaked? it depends on who you ask

Unless more than $5 billion in NFT transactions are recorded in this last week of March, an unlikely feat, the month will end with a worrying drop for the non-fungible token market.

That’s the amount needed to get close to the monthly totals for January and February, which look more and more like a spike in the emerging NFT market.

The average weekly total of NFT transactions so far in March is the lowest since July of last year, the month before the market really took off, and is 49% and 54% below the weekly averages in January and February. , respectively, according to data from blockchain analytics firm Chainalysis.

Depending on who you ask, the sector is either witnessing a rebound or in the midst of a reckoning. Could it be both?

“I would imagine a lot of people jumped in after the big price hikes last year and may not have seen the gains they were hoping for,” John Thetford, a 31-year-old retail investor who got involved in NFTs on Tuesday, told Yahoo Finance. last year.

The average weekly total of NFT transactions so far in March is the lowest since July of last year.

The average weekly total of NFT transactions so far in March is the lowest since July of last year. (Photo: Getty Creative)

To be sure, this year’s total transactions could exceed last year’s $43 billion, even if monthly totals stay in line with March’s. That’s largely because investors spent $20.4 billion, nearly half of all of 2021, in the first two months of 2022.

But staying at March levels is a far cry from the go-go days that began in August of last year. Other metrics show a similar slowdown.

Since the market’s peak on Jan. 31, more than half of its unique active buyers and sellers have left, according to NFT data aggregator Nonfungible. Where there were 21,296 NFT sellers at the end of the first month of 2022, there are only 7,210 left. The absence of buyers is even worse, going from 28,207 to 7,894.

What gives?

Pedro Herrara, senior blockchain analyst at DappRadar, told Yahoo Finance that the same risk-off sentiment due to monetary policy tightening and geopolitical uncertainty must have spooked NFT buyers on some level.

“We could attribute the dips to people looking to capitalize on NFT gains during these uncertain times,” Herrara said via email, “and shift their holdings to ‘safer’ and more liquid digital assets like BTC, ETH and stablecoins.” .

Bitcoin and ether are up between 13% and 14% in the last seven days.

Trading volumes faded across major NFT markets such as Open Sea, LooksRare, and Magic Eden during the first half of the month, but have improved over the past two weeks, according to charts by Richard Chen and Glenn Hull via Dune. Analytics.

Open Sea, which dominates NFT trading by volume, saw a significant drop in volumes after the weekend of February 19, when attackers stole $1.7 million worth of NFTs from customers via a phishing campaign. by email. However, in the second half of March, the numbers went up again.

Digital collectibles, especially profile picture NFTs, hold up the best. After the segment bottomed out in 2022 on March 6, the daily average sales price rebounded to $6,296 as of Friday, an increase of 68%.

The top winners that saw the most volume during this consolidation are projects like Azuki, Bored Ape Yacht Club (BAYC), World of Women, and Doodles, three high-value collections that sell for a minimum price of more than $40,000.

“Not all NFTs are created equal and will succeed,” said DappRadar’s Herrara. “It’s no longer enough to launch a $10,000 visually appealing avatar project. Teams must develop comprehensive roadmaps and build utility into every stage of a project.”

The most obvious benefactor of the development strategy is BAYC, according to Herrara. After hitting a relative bottom on March 7 at 68 ETH, the minimum cost to own a Bored Ape stood at 103 ETH as of Friday, but still 15 ETH below its peak, according to NFTPriceFloor.com.

People walk past a sign that says

People walk past a sign reading “NFT ATM” at a small store that houses digital art collection platform Neon’s first in-person vending machine in the city’s Lower Manhattan financial district in New York, USA, March 1, 2022 REUTERS/Brendan McDermid

At the same time, the creator of BAYC, Yuga Labs, acquired the intellectual property of two of the other most popular NFT collections. He gave 10,000 units of the new BAYC cryptocurrency, ApeCoin, to its NFT owners ($133,000 for each NFT based on the price of $APE on Friday morning on Coinmarketcap). He closed a $450 million seed round that earned him a $4 billion post-money valuation. And finally, he released a trailer detailing plans to build his own NFT-powered metaverse in the coming years.

“The roars are bigger than the floors,” Ashura, co-founder of Lazy Lions, another NFT avatar project that has fared better and has a BAYC-like metaverse-island roadmap plan, told Yahoo Finance. . “Which means that we are primarily focused on building a trusted, blue-chip name in the space over many years and not on the daily fluctuations of micro bottom prices.”

Much more affordable than many other top collections by daily transaction volume, Ashur pointed to “validation and cultural relevance” as drivers of Lazy Lions’ success in the attention-based market, citing partnerships with larger brands such as Coinbase, Sacramento Kings, and Puma.

Considering the build, Ashur emphasized the importance of preparing not for crashes, but for future market openings like the launch of Coinbase’s NFT platform and Meta’s Mark Zuckerberg’s confirmation that NFTs are coming to Instagram.

Jason Bailey, a longtime NFT creator and collector who has publicly called for a 2022 NFT market rollback, said he is not surprised by the drop. In fact, he sees a positive side.

“Previous bull markets gave the community a chance to focus and build without the frenzy,” Bailey told Yahoo Finance. I would say the market grew too fast last year and a pullback could be helpful for the long-term health of the market.”

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David Hollerith covers crypto for Yahoo Finance. FOLLOW ME @dshollers.

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