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How Real is the NFT Market Comeback?

Last Updated December 14, 2023 2:51 PM
Josh Adams
Last Updated December 14, 2023 2:51 PM
Key Takeaways
  • This autumn, chatter about an NFT market comeback has started again.
  • However, despite recent rises, there is a long way to go.
  • At the moment, non-fungible tokens are still a fringe pursuit.

Talk of an non-fungible token (NFT) resurgence has become more common recently, nearly two years after the market hit its all-time-highs. Surges in trading volume and mentions in the press, courtesy of Donald Trump, have brought attention.

But the latest figures show NFTs are still an incredibly niche pursuit.

Reaching the Top With the Tonight Show

2022 was a horrible year for the NFT market. It began with arguably the technology’s spiritual peak: Paris Hilton’s strange display on The Tonight Show with Jimmy Fallon, when both celebrities shared their respective Bored Ape NFTs. 

It was, however, the first time celebrities of such a caliber were discussing NFTs on prime-time television. Multiple outlets outside the cryptosphere covered the short showbiz chat, including Forbes , The Atlantic , The Telegraph , VICE , The Cut . Surely a bullish sign? Well, perhaps not. 

On January 5, the day of the show, the Bored Apes floor price was 90 ETH. It then increased to 118 ETH on February 1, but fell to 68 ETH by March 8. The peak price for these top-tier NFTs was 154 ETH on May 1. Since then, there has been a slow but steady decline.

In the second half of 2023, when Bitcoin (and digital assets more broadly) have been on a steady climb, Bored Apes’ floor price have spent almost all of the time since July bouncing around in between 25-30 ETH, or between

“But,” say staunch collectors, “Bored Apes are not a reflection of the wider health of the NFT digital collectibles.” Okay, that’s fair. Bored Apes are one collection at the top-end of the market. But what does the rest of the market have to say? 

An Underwhelming NFT Market

In the second half of the year, Ethereum (ETH) NFT Marketplace monthly volume (taking into account the marketplaces OpenSea, Blur, CryptoPunks, LooksRare, X2Y2, and ten others), revenue has only barely broken though the $500m mark twice – in July and November.

Monthly volume on Ethereum NFT marketplaces.
Ethereum NFT Marketplace Monthly Volume. Source | The Block.

But what looks even more concerning is where those trades are taking place.

According to data from The Block , Blur, a marketplace aimed at sophisticated NFT enthusiasts and traders, has completely dominated marketplace volume at 74% market share. OpenSea, for a long time the king of NFT marketplaces, and a platform with a deliberately simple easy-on-the-eye UI, has struggled to keep up, currently taking just a 22% share, according to data from The Block.

The numbers paint a picture of an NFT market dominated by a rare, atypical kind of person: those embedded in the rich culture of non-fungible tokens that, while it may be creative and fun for those involved, is alien to many in other digital asset markets, not to mention the general public.

Solana NFTs Doing the Hard Work?

Now there is some good news. Anyone who has been paying close attention to the digital asset market knows Solana (SOL) is having a moment in the sun. Perhaps unsurprisingly then, the extra liquidity has meant Solana NFT marketplaces have been on a tear since mid-November. 

Solana NFT marketplaces have had a good couple of months.
Solana NFT Marketplace Volume Daily. Source: The Block

However, this rapid surge has started from a low base. If we take November 1 as an arbitrary starting point, Solana NFT marketplace volume pumped 730% between then and December 12. Impressive? Yes. But in raw numbers, that’s a jump from $1.32m to $10.95m. 

For context, the peak Ethereum NFT marketplace monthly volume was $5.36 billion. Even in February of this year – a high point for 2023 – total monthly volume on Ethereum marketplaces was $1.65bn. Frankly, while Solana is finally shaking off its FTX connections and finding space to breathe, its rise is not enough to counteract the broader emptying of the NFT market.

What About Ordinals?

“Aha,” you may say. “What about Bitcoin Ordinals?” And in all fairness, Ordinals have had a significant impact on the market this year. Created by Casey Rodarmor, these unique digital artifacts are inscribed directly onto individual satoshis, the smallest unit of Bitcoin.  

(For now, let’s park the debate about whether or not Ordinals are NFTs).

Before 2023, they simply didn’t exist. So in that respect, they really have made a significant and permanent change to the market. But whilst they’ve been doing some serious heavy lifting since the beginning of November, according to data from The Block, they still don’t help counter the wider NFT malaise.

Fundamentally, the NFT market is missing one crucial thing: people who actually want to buy and sell them.

 

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