Is The NFT Market Dead Or Alive? That Depends On Who You Ask
After taking the market by storm in 2021, the growth of non-fungible tokens has faced some bumps in 2022. Ask those who cover the sector if the NFT market is dead or alive, and you may get some different answers.
What Happened: A recent report from The Wall Street Journal said sales of NFTs are flatlining and the market growth could be over.
“Is this the beginning of the end of NFTs?” WSJ asked. The outlet pointed to sales of NFTs falling to a lower total for their daily average. The daily average NFT sales were around 19,000 in April, down 92% from a peak of over 225,000 in September.
The report is based on the number of NFTs and not the sales volume in dollars, which could be misleading. Several of the biggest NFT launches of all time have occurred in the last two months, and sales volume remains relatively healthy.
A report from Decrypt highlights April sales volume was up 45% month-over-month with $3.8 billion in sales. The month was led by Moonbirds and the growth of Solana-based (CRYPTO: SOL) NFTs like Okay Bears.
April sales volume was up from a $2.6 billion total in March and nearly beat a $3.81 billion total recognized in February.
Meanwhile, Sales volume on leading NFT marketplace OpenSea was up 40% month-over-month in April, according to the report.
While the WSJ report makes the case for NFTs being dead, some could argue the complete opposite based on April figures.
Related Link: How To Buy NFTs
What’s Next: The Decrypt report said May sales volume was already strong, suggesting that the NFT market is very much alive.
One of the biggest launches of all time kicked off the month of May with Yuga Labs' drop of Otherdeed for Otherside, its metaverse land project. The sale of 55,000 NFTs was one of the biggest mints of all time, with unprecedented demand and record amounts of Ethereum (CRYPTO: ETH) burned.
In April, the launch of Moonbirds broke records as the top mint of all time. Shortly after the project launched, it was announced that Reddit Co-founder Alexis Ohanian was backing the project financially to take it to the next level.
In the past two months, two record-breaking projects have come along and have seen huge demand and record sales volume. This could show that the NFT market has gotten away from the vast number of mints that were happening every day at its peak in 2021 and now favors several big drops every week. While the overall number of NFT transactions is down, sales volume is up, representing a strong case for supply and demand.
NFT project Doodles also recently announced Julian Holguin as its CEO. Holguin is the former President of Billboard. Adding an experienced CEO to Doodles will help with expanding intellectual property into music, gaming and entertainment, the company said. NFT projects looking for external CEO candidates could signal that several projects see staying power in the space.
Bored Ape Yacht Club parent Yuga Labs announced a new funding round that valued the company at $4 billion in March, including investments from top tech companies and celebrities.
A look at NFT sales volume on CryptoSlam on Tuesday showed that all the top 32 projects had an increase in their daily sales volume, with some up triple digits. Over the last seven days, four of the top 10 projects by sales volume have seen increases on a week-over-week basis. In the last 30 days, eight of the top 10 projects by sales volume are new or saw an increase in volume.
Although, not all NFT projects will have lasting power or go up in value, making them a potential high risk-high reward trade.
Entrepreneur and NFT investor/creator Gary Vee shared a cautionary tale with Benzinga in April 2021 on his thoughts about the NFT market.
Vee said there was room for the NFT market to grow, but a lot of money would be lost due to supply and demand issues. He believed that every celebrity and everyone with intellectual property would launch an NFT project in the next 25 months.
“NFTs are here for the rest of our collective lives,” Vee said.
Vee noted NFTs could be called a fad and go away and then come back to life years later, similar to several cryptocurrencies.
Many in the NFT community also point to investors and collectors turning back to art based projects and NFTs with utility like membership clubs or play-to-earn games, instead of holding profile picture-based NFTs.
So is the NFT market dead or alive? Well, it really depends on who you ask and what metric you use to measure. The answer could be a little of both.