Following a couple of relatively dormant months, the NFT market has sprung back to life and is hitting record after new record. Its resurgence has served to disprove multiple obituaries written for the space after it plummeted from its meteoric highs in early 2021.
But are NFTs here to stay or are they simply a blip on the cryptocurrency market radar? Will they soon fizzle out or do they have the potential to cement their position as a relevant blockchain sector? Let’s find out below what the relevant facts and crypto personalities have to say.
NFT Market Capitalization Tops $ 40 Trillion
In March 2021, the artist Beeple made headlines when he auctioned off a collection of NFTs for $ 69 million at Christie’s. Shortly thereafter, the NFT market took a nosedive, shrinking by 90% from its peak. At the time, many wrote the entire market off as a simple blip. However, recent reports from the space dismiss these and highlight the massive potential in this nascent space.
According to the research data analyzed and published by Wette.de , the global NFT market has a capitalization of $ 43.08 billion as of October 25, 2021. Its trading volume is around $ 3.60 billion.
Just like everything else in the blockchain ecosystem, the NFT market is characterized by waves and cycles. Admittedly, it has seen its fair share of hype and mania, but it has almost gained recognition beyond the hardcore blockchain fan base. We have more and more influencers, musicians, athletes and big-name investors issuing collectibles.
When the market first took off with the CryptoPunks collection in 2017, it had very little recognition beyond the blockchain sector. By 2020, however, weekly transaction volume was in the range of 30,000 to 80,000 NFTs.
Fast forward to 2021 and according to NonFungible.com, weekly sales range between $ 10 million and $ 20 million. There have been a number of wild weeks that have seen up to $ 170 million in sales. For instance, between the end of April 2021 and the end of May 2021, weekly trading volume rose from $ 50 million to nearly $ 200 million, a stunning 300% rise.
The number of buyers is also rising and was estimated at around 39,000 in March 2021. This is up from an average of around 10,000 in 2020. Comparing Q2 2020 to Q2 2021, NonFungible.com places the increase in the number of unique buyers at 450 %.
Global Interest In NFTs Surges 426% In One Month
If Google search data is anything to go by, global interest in non-fungible tokens (NFTs) has been on a steep rise over the past year. According to Google Trends, the month of August 2021 alone saw worldwide interest in the asset class surge by a whopping 426%.
At the beginning of August, the keyword “how to buy NFT” had 20 searches. By August 28, it had risen to 100. For perspective, the level of search interest is measured in points, with 0 being the lowest and 100, the highest.
While there was a brief spike to 76 in March, it plummeted to as low as 44 by mid-April. There was a second brief spike at the beginning of May, hitting 70. But it went on to sink to a low of 19 at the start of July.
Per Google Trends, China is currently the leading region by interest, with 100 points. Singapore ranks second at 65, and Venezuela is third with 50. Hong Kong and the Philippines round off the top five with 48 and 44 points, respectively.
Other regions with high levels of interest include Canada, Australia, United States, New Zealand and South Korea.
NFT Trading Volume Up By 704% In Q3 2021 To $ 10.67 Trillion
Alongside the surging interest in the NFT asset class, there has been considerable growth in the space in terms of trading volume as well. During the first quarter of 2021, total NFT sales hit $ 1.2 billion according to DappRadar. The figure rose to $ 1.3 billion during the second quarter.
In the third quarter, however, it rose to a stunning high of $ 10.67 billion, marking a 704% jump from the previous quarter. August 2021 was a particularly remarkable month as it saw trading volume rise to a record $ 5.2 billion. Though there was a slight decline in September 2021, the month still saw sales amounting to an impressive $ 4 billion.
On the biggest NFT marketplace OpenSea, Q3 sales volumes hit $ 3.4 billion in the month of August 2021 alone. Compared to the previous month’s volumes, this works out to an increase of over 800%. To place the growth in perspective, the marketplace recorded $ 8 million in monthly sales in January 2020. And for the whole of 2020, total sales hit $ 20 million. Even as global stock markets dipped in September 2021, activity remained strong, hitting $ 3 billion.
At the end of Q3, DappRadar placed total industry year-to-date sales at $ 13.2 billion. Notably, the site’s figures include multiple blockchains and also take into consideration off-chain transactions. On the other hand, NonFungible.com, which only tracks transactions on Ethereum, puts the total at $ 7 billion.
If transaction volume on top NFT marketplaces is anything to go by, the fourth quarter of the year will follow a similar trend. According to data from Cryptoslam, OpenSea has reportedly facilitated transactions worth around $ 3 billion in the 30-day period which ended on October 16, 2021.
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Top Three Auction Houses Sold NFTs Worth $ 116 Million In H1 2021
Since the sale of Beeple’s digital collage in March 2021, no known NFT has come close to that price. However, the market is far from dead and auction houses still hold sales and fetch millions.
A year following its first NFT sale, Christie’s crossed the $ 100 million mark in NFT sales in October 2021. Most recently, the auction house held its first-ever NFT online sale in Asia, raking in $ 15.6 million on September 28, 2021.
The trend cuts across the three major auction houses, all of which have participated in the growing market’s gains. According to Barron’s, the three houses made a collective $ 116 million in NFT sales during the first six months of 2021. Further sales were slated for the second half of the year, an indication that the trend is just beginning.
In a bid to capture the massive NFT market potential, Sotheby’s is making major strides in the industry. Most recently, in October 2021, it announced the launch of Sotheby’s Metaverse. It describes this as a proprietary, custom NFT marketplace made for a curated collection of NFTs.
At the time of the launch, Sotheby’s boasted total sales of $70 million from the asset class. Sotheby’s Metaverse kicks off with 53 NFTs from 19 high-profile collectors and is set to open bidding from October 18 to 26, 2021.
Collectibles And Art Continue To Dominate Sales
For the longest time, collectibles have been the top selling category in the NFT market. Data from NonFungible.com reveals that in the 30-day period which ended on October 4, 2021, the category sold 329,065 units. Comparatively, the art segment sold 76,606 units while utility sales totaled 37,349. Game sales amounted to 30,990, metaverse 7,788 and sports 568.
Apart from the collectibles and art segments that dominate sales, the rest have been switching places. In Q2 2021, collectibles accounted for 66% of all sales and art had a 14% share. Sports and metaverse tied with 7% each, while game had 5% and utility 1%.
During Q3 2021, more than 50% of NFTs sold were in the range of $101 to $1,000. Those priced at less than $100 accounted for 17% of sales while those between $1,001 and $10,000 held a 20% share.
As of October 2021, Beeple still ranks first on the list of top NFT artists with a total artwork value of $145.03 million. He has sold 1,346 artworks so far with an average sale of $107,752 according to Cryptoart.io. The second-ranking artist, Pak, follows at a considerable distance with $56.41 million in total value.
Looking at NFT collection rankings by sales volume, Axie Infinity is top with total sales at $2.55 billion according to Cryptoslam.io. CryptoPunks is second with $1.49 billion and Art Blocks ranks third with $999.63 million. NBA Top Shot and Bored Ape Yacht Club round off the top five with $749.27 million and $569.99 million, respectively.
Nowhere To Go But Up
Like any other blockchain sector, the NFT market has had its ebbs and flows. Its very first wave seemed to be a testing ground focusing on the digital possibilities for the art market. As new use cases are unveiled and adaptation thrives, the NFT sector has entered a new phase. Based on the numbers, it is evident that the market still has plenty of room for expansion.
Factors such as the rising popularity of gaming as well as the easy and cost-effective NFT-minting process are acting as tailwinds propelling the space forward. As it seeks to adapt to the needs of the new digital generation, the NFT market’s outlook is materializing in every respect.