Forex in this article
• The trading volume of NFT decreased in Q1 2022.
• On the other hand, the number of users has probably not decreased
• Latin America and North America are the most important regions in the world for NFT transactions
Falling transaction volumes, less web traffic, less publicity – the NFT industry has not been spared from the recent downturns in the international capital markets. As in the case of cryptocurrencies, the first months of 2022 were disappointing for the NFT. What exactly did the Chainalysis Report find out?
The macroeconomic conditions currently run counter to the polarization of the NFT
NFT is an extremely polarizing asset: cryptocurrency fans are excited about the tokenized representations stored in the blockchain. Skeptics, on the other hand, see the NFT as an unpredictable speculative bubble whose snowball system is about to collapse like a house of cards. For example, while Snoop Dog is a huge fan of NFT and uses the Cardano blockchain to issue tokenized artworks, Kanye West does not believe in these new resources at all, as reported by BTC-ECHO.
Despite criticism that cannot be ignored, the NFT may have taken off in 2021. In a good stock year with very liquid money supply, low interest rates and good sentiment, especially in the tech sector, new tokenized images were allowed to flourish. But in 2022 the reverse was true: the high rate of inflation that the US central bank wants to address with vigorous increases in key interest rates is particularly damaging to asset classes considered risky, such as speculative high-flyers, cryptocurrencies, and the NFT.
Transaction volume drop
No wonder then that trading volume on OpenSea, the largest NFT market in the world, has dropped by as much as 70 percent, according to “BTC-ECHO”. The NFT report published in early May by data analyst Chainalysis confirms declining interest in NFT. NFT trading activity has declined sharply, particularly since mid-February.
In September 2021, the previous record for daily transactions of almost four billion dollars was reached – in April this important indicator temporarily dropped below one billion dollars. The average volume per trade also fell from just below $ 2,300 (November 2021) to below $ 500 in March.
Overall, the NFT market is very volatile
However, these statistics should be approached with caution, emphasizes BTC-ECHO. The volatility of the NFT market is traditionally very high and is subject to daily fluctuations that do not necessarily indicate an overarching trend. For example, in September 2021, NFT transaction volume quickly recovered to just $ 1.5 billion after peaking at $ 4 billion. A decline in trading volume should therefore not directly mean that investors are less interested.
The transaction volume increased again in April
It is therefore clearly premature to announce the end of the NFT boom. The statistics also show that the NFT trading volume increased again in early April. Chainalysis wrote in the report: “However, the NFT market started to recover in mid-April and is now approaching the weekly volume it had reached earlier this year, possibly reflecting the recent launch of the Bored Ape Metaverse Yacht Club project.”
The number of users is likely to be constant
In addition, the number of active users also does not indicate a failure of the NFT. By the end of 2021, Chainalysis had counted around 625,000 unique addresses related to NFT trading. Earlier this year, the number of these addresses reportedly increased to 950,000, an increase of over 50%.
“In the second quarter of 2022 (as of May 1), 491,000 are for NFTs traded, and the NFT market continues its quarterly trend of increasing participant numbers,” the analyst firm writes in the report. Although the quarter is not over yet, the number is already much higher than in the first quarter of last year, when only a few thousand addresses were selling NFT. While the number of people has dropped significantly and traffic has also dropped, the number of people interested in the NFT does not seem to decrease so far.
Latin America as the most important NFT region
Interesting results were also provided by the analysis of the geographical distribution of the NFT trading volume. In the spring of 2022, about 26 percent of NFTs were traded in Latin America, putting the region ahead of North America, which is in second place with about 23 percent. Western Europe, Central and South Asia, East Asia, Eastern Europe, Middle East and Eastern Europe are in that order. In the rear is Africa, where less than 5 percent of NFT was traded.
According to Chainalysis data, there is no single region in the world that accounts for over 30 percent of global NFT transactions, proving that tokenized images are a global phenomenon. Only on the African continent the dynamics is still very low.
Overall, singing goodbye to the NFT seems over the top, according to BTC-ECHO. Rather, declining trading volumes indicate that not everything with “NFT” in it will actually make it through the roof. As a result, the recent lull could mean that the “wheat-chaff separation” in the NFT sector could continue. An important factor influencing the future of the NFT is undoubtedly the further development of the alleged Metaverse megatrend.
Editors of finanzen.net
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