The last couple of years were a wild roller coaster ride for all the participants in the NFT space. Ever since the rapid expansion of NFTs many people started considering them as an investment drawing the price even higher.
Some images even reached multiple millions of dollars, which is unbelievable.
However, this year the NFT market seems like it is cooling off and going back to its normal progression as a revolutionary technology that can be used for many things.
As with anything in this world whether we are talking about stocks, crypto, NFTs, houses, or cars, as the demand rises, the price of individual assets climbs higher. However, this has the same effect when the demand starts to decrease, in which case the price drops.
This year many things suggest that we are in a bear market considering NFTs. With lower trading volume, the NFT marketplace seems like it is cooling off from the rapid expansion not too long ago. Nonetheless, there are numerous games appearing connected to NFTs, like this one: https://wizardia.io/
So, even though the situation has stabilized and we’ve seen lower demand for NFTs, have they still considered a hot market? Let’s find out.
Are NFTs Still Popular?
To find out whether NFTs are still considered one of the best investments we have to look at data. There is no doubt that the NFT marketplace had a rough start this year.
If we look at the trading volume at the beginning of the year, we can spot a huge drop. In February alone, the NFT trading volume dropped from almost $4 billion in a week, to around $965 million until March.
This marked the lowest weekly trading level of NFTs since August 2021.
With such a significant drop, everyone started to think that the NFT craze is over and possibly look for an exit strategy. However, the NFT marketplace was not done yet. In fact, it showed some signs of recovery in mid-April this year.
To be honest, the entire NFTs transaction activity climbed back to the top with $37 billion in cryptocurrency send to NFT marketplaces as of May 2022. This is very close to that last year’s total of $40 billion sent in 2021 for the same period.
Considering that 2021 was the biggest time for NFTs and many new projects and investors were introduced to the market, this year’s numbers are actually very good.
This suggests that the NFT industry is still very hot and the trend will continue until the end of the year. The most surprising thing about NFTs is the market volume trading activity, especially in times like these where crypto and stocks are reaching all-time-lows in the eyes of recession.
Another thing to point out which showcases people’s interest in the NFT marketplace is the number of unique cryptocurrency wallets, which represent users that are making transactions (either buying or selling an NFT).
If we look at the first quarter of 2022, we can see that there are around 950,000 unique cryptocurrency wallet addresses, which is up from the 627,000 we had in the fourth quarter of 2021.
With that said it is also important to mention that not all unique wallet addresses suggest more people. There is a lot of wash trading this year (when the same person is on both sides of a transaction) which is an activity where people create artificially high value for an asset.
However, there is definitely a good number of new users participating in the NFT space, which suggests that it is still a hot market.
Popular Projects this Year
In order to see how the market has reached these incredible numbers, which are almost identical to last year, we have to look at some of the individual projects that acquired the most volume.
This big spike in activity was largely due to popular NFT projects like Moonbirds, which is a collection of 10,000 pixelated owls that pulled in over $500 million in sales volume, as well as Otherdeeds, the Bored Ape Yacht Club metaverse land NFTs, that reached more than $700 million in trading volume.