The third quarter NFT market insight report: withstood the bear market decline, where is the next step? – Blocker

The third quarter NFT market insight report: withstood the bear market decline, where is the next step? – Blocker

In the third quarter of 2022, the entire cryptocurrency industry fell into a trough, and we saw a series of problems such as increased competition in the market, a decrease in the number of new buyers and sellers, and an increased risk of fraud. At the same time, NFT seems to have withstood the bear market decline. With the entry of multinational companies such as Starbucks, this emerging field has been injected with a lot of vitality. Let’s take a look at the NFT market dynamics in the past period through this latest report!

Q3 NFT Market Overview

By the end of the first quarter of 2022, the total transaction value of NFTs exceeded $12 billion, and the sales volume reached 28 million. However, entering the second quarter, with a series of events such as the collapse of the Terra ecosystem and the ensuing CeFi liquidation, the transaction value of the NFT market fell by 33% ($8 billion) and the sales volume fell by 29% (2023). million).

The high level of economic uncertainty and crypto events experienced in the second quarter caused NFT transaction volume to plummet in the third quarter (only $2.5 billion was generated), but market demand remained stable, even as NFT transaction volume shrank sharply, independent NFT transactions The number of visitors (more than 2.2 million) is still above the level, and more importantly, the metric has also increased by 36% compared to the third quarter of last year.


While investors with large portfolios (often referred to as “whales”) are still driving NFT sales, the increase in the number of new buyers shows that there are still many people who are curious about NFTs and want to add to the asset class. big investment.


We have reason to believe that, similar to works of art, NFTs can also be an asset class that properly stores value. Since Terra crashed in May, even in a bear market, the top 100 Ethereum on-chain NFT holdings have only lost 50% of their dollar market cap.


Next, let’s delve into the state of the field and subsequent trends by analyzing some of the blue-chip projects in the NFT category.

1. Digital Collection NFT

There is no doubt that to a large extent, digital collectibles still dominate the NFT market. In the first quarter of 2022, the total transaction value generated by NFT digital collections exceeded $9 billion. It fell 49.5% to $5 billion in the second quarter, and plunged a further 84% to $713 million in the third quarter, the lowest level since the first quarter of 2021. It is worth mentioning that 52% of NFT digital collections are PFP stickers.


In terms of public chains, Ethereum is still the blockchain network that generates the most NFT transactions, providing huge support for the vaguely most valuable NFT assets and innovative markets and aggregators (such as OpenSea, X2Y2, Gem, etc.), and the third Quarterly NFT transactions on the Ethereum chain accounted for 91% ($645 million) of total network NFT transactions.

Q3 2022 saw a 93% drop in transaction volume compared to the same period last year, but CryptoPunk #5822 was a bright spot during the period with a record 8,000 ETH (~$23.7 million), the sale of CryptoPunks The largest transaction in NFT history, the NFT was purchased by Chain CEO Deepak Thapliial (Deepak.eth).


In addition, the NFT transaction volume of the Flow blockchain accounted for 2.54%, and the NFT transaction volume of the Ronin blockchain accounted for 2.53%. It is worth noting that the total transaction volume of NFTs on the ImmutableX chain increased by 87% compared to the previous quarter, making it the only blockchain with positive growth in NFT transaction volume this year.


Looking at the number of on-chain sales in Q3 2022, things are different, with Ethereum still the dominant chain, but with only 26.22% of total sales. As can be seen from the obvious difference between transaction volume and transaction volume, Ethereum may have attracted more “high-end whale-level buyers”, while other blockchains are favored by small and medium traders.


On the other hand, thanks to the rich expansion solutions provided for Web3 games and GameFi DApps, ImmutableX’s NFT transaction volume accounted for 23.12% and Ronin’s NFT transaction volume accounted for 18.81%, which has become the main NFT transaction volume. market.

2. Blue chip NFT

Among the top 11 NFT projects (shown below), Yuga Labs has four projects: CryptoPunks, Bored Ape Yacht Club (BAYC), Otherdeeds for Otherside and Mutant Ape Yacht Club (MAYC), which traded in Q2 amounted to more than $237 million. But in the third quarter, the transaction value of the top 11 blue-chip NFT series fell by 88% to just over $334 million, which is not far behind the second quarter of 2021.


In fact, if we break down to the month, we find that the blue-chip NFT transaction volume in June was $203 million, an 83% drop from the $1.2 billion in May. This situation is likely to be caused by the collapse of Terra and the liquidity crunch in the market. However, even with the decline in total transaction value, the floor price of the top 11 blue-chip NFT series did not drop significantly, and was roughly the same as the floor price before Terra crashed.

However, for the four NFT projects owned by Yuga Labs, except for the MAYC floor price (14.30 ETH), which rose 2.14% from August, the floor prices of the other three projects all fell. Compared to August, CryptoPunks is down 5.19% (63.95 ETH), BAYC is down 7.36% (73 ETH), and Otherdeed has a smaller drop of 0.57%.


Since these NFTs not only represent digital collections, but also act as access passes to everyone’s identity, the “average days held” indicator is particularly important. In this regard, CryptoPunks ranks first with an “average holding days” of 239 days, followed by BAYC with 129.8 days, and MAYC and Otherdeed with roughly the same average holding days at 96.9 days. In addition, Azuki has the lowest number of “average days held” metric, suggesting that Azuki NFTs may be viewed more as investment vehicles rather than long-term holdings.


3. Digital Art NFT

Since January 2021, more than 4.5 million digital art NFTs have been sold, with a total transaction value of over $3 billion. It is said that collectors have turned to the digital art market due to the difficulty of purchasing physical art during the epidemic, among which Beeple, Pak, Fewocious and several other artists are the main contributors to the market, and also promote NFTs to the mass market.


In the first quarter of 2022, the total transaction value of digital art NFTs exceeded $300 million, of which 666,000 were sold. But entering the second quarter, overall transaction value plummeted 30% to $215 million, and sales also fell 32%. The third quarter was even worse, with overall transaction value of only $59 million, down 72% sequentially, and sales volume down 43% from the previous quarter to 258,000.


However, there were some bright spots in the digital art NFT field in the third quarter. For example, the Museum of Modern Art (MoMA) in New York has begun to consider spending $70 million to purchase NFT-related artworks.

4. Game NFT

GameFi is worth over $8.6 billion with 847,000 daily unique active wallets (UAWs) registered in August and is expected to grow exponentially over the next few years. Many popular blockchain games, such as Axie Infinity, Gods Unchained, and Aavegotchi, use NFTs to interact, and major game companies such as Ubisoft have also incorporated NFTs into game design.


However, not all traditional gaming communities welcome NFTs. Three game companies, such as EA Games, Mojang Studios and Team, have announced that they will not use NFTs in their games.

In the first quarter of 2022, the total transaction value of game NFTs exceeded $1 billion, fell by 53% in the second quarter, and fell further to $71 million in the third quarter, a drop of as much as 84%. In terms of sales volume, the market trend is also not optimistic: in the first quarter of 2022, the sales volume of game NFTs was close to 12 million, and in the second quarter, it dropped to 6 million, a drop of 50%, and in the third quarter, it fell further, only 3.3 million transactions.

In addition, according to game-related public chain data (as shown in the figure below), 40% of blockchain game activities take place on the Wax blockchain. In August, the average daily unique active wallet registrations on the WAX ​​chain dropped by 8%. Hive is the second-largest gaming blockchain, and the average daily active wallet registrations on the chain in August increased by 12% month-on-month to 169,043. Also showing growth is BNB Chain, whose daily average unique active wallet registrations on the chain increased by 8% month-on-month to more than 92,000, and the Solana chain’s average daily unique active wallet registrations increased by 21% month-on-month.


It should be noted that although the total transaction volume and sales of blockchain game NFTs have dropped significantly, they still attracted more than $4 billion in investment.

5. Fashion and luxury NFTs

The fashion industry’s first NFT “trial” took place in the footwear market, when RTFKT Studios launched their own pair of branded virtual sneakers, and luxury giant Gucci released a virtual shoe called “Gucci Virtual 22” This trend has even been transferred to gaming platforms. For example, League of Legends has announced a partnership with Louis Vuitton, and British fashion giant Burberry has jointly released a wearable NFT with the Web3 gaming platform Blankos.


The total transaction value of fashion NFTs exceeded $16 million in the first quarter of 2022, fell to above $15 million in the second quarter, but the transaction value has fallen sharply since May, and the total transaction value in August was less than $1 million, and the third quarter The month-on-month drop was a staggering 89%.

However, there were some bright spots in the fashion NFT market in the third quarter, such as the launch of 250 CryptoPunks-themed “NFTiff” collections by Tiffany & Co, which generated $12.5 million in revenue.

6. Sports NFT

Led by Sorare and NBA Top Shot, sports NFTs generated $128 million in transactions in Q1 2022 from over 4 million transactions. However, following industry trends, NFT transaction volume plummeted 63% in the second quarter, while sales fell 54%. In the third quarter, the total transaction value of sports NFTs exceeded 18 million US dollars, a decrease of 61% from the previous quarter, and the sales volume was only about 1 million, a decrease of 47% from the second quarter.


Nonetheless, the sports world is still expected to become one of the most active NFT vertical markets, Sorare is expected to benefit from the popularity of the World Cup, and NFTs on the Flow chain are also showing signs of steady development due to the cooperation between the NBA and the NFL.


Although no one can accurately predict the future of the global cryptocurrency market, NFTs are attracting a wider range of market participants, and blockchains such as Solana, Flow, and Tezos are also driving NFTs to embrace emerging blockchain technologies in industries such as gaming and entertainment.

It is worth mentioning that many brands have begun to actively adopt NFT technology. Ticketmaster has just cooperated with Flow to integrate NFT in the ticket business; Starbucks also announced the launch of “Starbucks Odyssey”, which combines the Starbucks Rewards loyalty program with the NFT platform. By allowing its customers to earn and buy digital assets to unlock exclusive experiences and rewards like perks or free drinks, Odyssey is trying to use Odyssey to give loyal customers a wider range of rewards, while also building a more engaged community.

Frankly speaking, it is difficult for the NFT market in 2022 to once again create the brilliance of the $25 billion in sales in 2021, especially under the factors affecting the market such as the Fed’s interest rate hike and inflation uncertainty, both cryptocurrencies and traditional financial markets are experiencing. Violent fluctuations, but in contrast, the NFT market has not been affected as much as people think, and it has resisted the beating of the bear market, and the future can be expected.


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