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Will digital collectibles be obsolete in 2022?

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Admittedly, with some projects the motto in the hype of the past year seemed to have been “The main thing was something with NFTs”. At least it is an open question as to what use digital toothpaste, for example, is supposed to have in the Metaverse – we have formed our own picture of the virtual parallel world of the blockchain game “The Sandbox” on the blockchain.

Because NFTs seem to be particularly successful in the art and culture industry, there are also different opinions from this scene about the tokens of the digital shortage. For example, rapper Snoop Dogg uses the Cardano blockchain to tokenize new artworks, while Kanye West has absolutely no interest in the subject.

How is the NFT market doing now? Lastly, the NFT trading volume is said to be up OpenSea dropped by 70 percent. In a new report, the blockchain analytics firm chainalysis scrutinized the industry and came to the following conclusions, among others.

The NFT market is volatile

While the NFT market appears to have grown overall, some outliers can be seen in the chart. NFT transaction activity has fallen drastically since mid-February this year.

Chainalysis NFT report chart
The NFT market is growing, but not consistently. Source: Chainalysis

At the same time, however, it can also be seen that the NFT market has been in ebb and flow since summer last year. For example, NFT volume surged to almost $4 billion in September 2021, only to revisit about $1.5 billion in the same month — a correction of over 60 percent.

Could it be that the negative development in the NFT market will continue? At the beginning of the second quarter of 2022, for example, another outlier to the north can be identified.

“However, the NFT market began to recover in mid-April and is now approaching the weekly volume it reached earlier in the year, likely due to the recent launch of Bored Ape Yacht Club’s Metaverse project,” Chainalysis writes in the report.

Active NFT traders are steadily increasing

The number of active NFT buyers and sellers still seems to be increasing steadily.

Chainalysis NFT report chart
The number of active NFT traders is increasing. Source: Chainalysis

At the end of 2021, Chainalysis counted approximately 625,000 unique addresses related to NFT trading. At the beginning of this year, the number of these addresses is said to have increased to 950,000 – a growth of more than 50 percent.

“In the second quarter of 2022 (as of May 1), 491,000 addresses traded NFTs, with the NFT market continuing its quarterly growth trend in the number of participants,” the analytics firm writes in the report.

Central and South America drive the NFT market

According to the report, most of the web traffic surrounding NFTs originates in Central and South America.

Chainalysis NFT report chart
Web traffic has generally flattened out in early 2022. Source: Chainalysis

North America and Western Europe are in second and third place in the ranking. Meanwhile, according to Chainalysis, there is no region that can attribute more than 40 percent of all traffic. This could be an indication that NFTs are targeting a global audience rather than just select countries.

Only Africa seems to show little dynamism in web traffic development and is thus rather uninterested.

So while the number of NFT traders is increasing, the transaction volume and web traffic around digital artworks seems to be shrinking. Whether NFTs are obsolete or not is not so easy to answer. Rather, it seems possible that the wheat is now being separated from the chaff when it comes to NFT projects.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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