Has The NFT Market Peaked?

The Non Fungible Token has continued to gather hype and buzz from all walks of life.

Since the global acceptance of NFT in 2021, it has continued to break trading records set on previous occasions.

The NFT trading volume in January and February 2022 is the highest in recent times.

While some statistics indicate an exponential increase in the trading volume and transactions on NFT, others show a sharp decline.

The patronage of NFT across several marketplaces has declined to show a loss of interest among holders and collectors.

The 20,000 % increase from 2021 to 2022 shows that the NFT market has a promising future.

The Non Fungible Token has continued to gain momentum and global acceptance over the last couple of years.

The blockchain-based digital collectibles have become the toast of several investors, art creators, and enthusiasts.

The hype around the NFT is massive across the board. Several marketplaces, art creators, and collectors are trooping into the blockchain platform.

There is a little entry requirement and no rigid regulations guiding the activities and transactions of Non-Fungible Tokens. The decentralized and open-source nature of NFT makes it an open space for all.

The last couple of years has shown that the NFT space is a promising market. However, recent events and happenings are showing signs of a fading market.

The question that continues to beg for an answer is, “has the NFT market peaked?”

This article will examine the buzz around NFT, various activities, and events that show whether the NFT global trading platform is at its peak or otherwise.

Let's begin!

What Is NFT?

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Image: Entrepreneur

NFT is the acronym for Non-Fungible Token.

NFT is a virtual asset that is verifiable on blockchain technology.

For an artwork, music, video, or in-game assets to become an NFT, you must mint it and make it available on an NFT marketplace.

A Non Fungible token or asset is unique and can not be exchanged.

You can only transfer the ownership of an NFT from one holder or collector to another via blockchain transactions.

NFTs have been around since 2014 but became popular and gathered global buzz in 2021.

All NFT transactions are done using cryptocurrencies.

Statistics Of Events And Happenings Around NFT

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Image: World Economic Forum

According to Chain analysis, the average weekly transaction volume of NFTs in March 2022 is the lowest since July 2021.

A considerable decrease is compared between the NFT trading volume in March 2022 to the average trading volume in January and February of the same year. The comparison by Chainanalysis shows a 49% decline compared to January and a 54% decline compared to February.

In another research, the total transaction volume of NFT in 2021 was $43 billion. However, in the first two months of 2022 (January and February), the total NFT transactions amount to $20.4 billion.

This statistic shows that the first two months' total trading volume of NFTs equals half of last year's total transaction. This statistic indicates a good performance compared to the previous year's same duration.

In January 2022, there were 21,296 NFT sellers across all NFT marketplaces. In March 2022, there were about 7,210 sellers.

The buyer situation shows a similar decline from 28,207 in January to 7,894 in March.

A thorough look at these statistics and events over the last year shows that the buzz around the NFT is slowing down and affecting the volume of transactions.

However, there are no clear reasons to prove whether the NFT market is at its peak or declining.

Reasons For The Decline In NFT Transactions

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Image: Sunlight Media

Experts suggest this is not a reasonable period to invest in the NFT market. The market saw a sharp rise due to immense hype and speculation, and now, all metrics show that the blockchain-powered market is declining.

What could be the reasons for the decline?

Experts believe that one of the reasons for the decline in NFT transactions in 2022 is the February 29 Email phishing attack on Opensea. The hacking resulted in the loss of $1.7 million worth of NFTs.

Since that incident, Opensea, the most popular NFT marketplace, has continued to witness a decline in its total trading volume.

Another reason could be the uncertainty of buyers and collectors of NFT in moving their holdings to safer and more liquid cryptocurrencies such as ETH, BTC, and Stablecoins.

By moving their holdings to these supposedly stable coins, BTC and ETH have both risen by about 13% and 14%, respectively. So instead of investing in NFTs and becoming collectors, the investments are tied to crypto assets.

While some enthusiasts and shareholders will take the following events as pointers to conclude that the NFT market is declining, the following events show that the NFT market has peaked. They include;

Opensea, the dominant marketplace for NFT, saw a significant drop in transaction volume by February. However, in the first week of March, the daily average sales volume increased by 68%.

In 2020 the total volume of NFT transactions was about $100 million. In 2021, the trading volume rose to $23 billion showing a staggering increase of about 20,000%. 2022 is not yet over, but the trading volume shows a promising market ahead at the end of the first two months.

Conclusion

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The rise and fall of the NFT transactions leave experts and enthusiasts with a confusing stance on whether the market is declining or has peaked.

Some events, happenings, and statistics, as illustrated above, show that the market is declining at an alarming rate. Albeit, some other events and statistics show a tremendous increase in the NFT transactions.

So, depending on who you ask or the statistics available at your disposal, you can not say whether the NFT market has peaked or not.



Author: Valentine. A, Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
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