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The NFT market is undergoing a contraction in 2023, with daily trading volumes experiencing a notable decline compared to prior peaks, as indicated by a recent NFT report from Galaxy.
The performance of Ethereum has surpassed that of NFT projects, resulting in a breakdown of their historically positive correlation. Nevertheless, NFT activity remains above the 12-month lows recorded in November 2022, with daily trading volume decreasing each month throughout 2023.
NFT marketplaces
In the NFT marketplace sector, Blur has achieved a trading volume dominance of 80%, reaching an all-time high, primarily driven by airdrop farmers looking to capitalize on its season 2 token airdrop. “The top 1% of Blur traders represent 64% of the platform’s volume,” in contrast to just 20% on OpenSea.
OpenSea, which primarily serves the retail collector market, has taken steps to attract professional traders by introducing a pro trading platform and lowering fees, resulting in a notable increase in trading volumes to 23.7% (+52%), while Blur’s volume has decreased by 15%.
OpenSea’s strategy to vie for the attention of professional traders is a significant move, as whale activity on Blur has shifted its user demographic towards professionals, with the top 1% of users accounting for roughly 64% of the platform’s trading volume. Meanwhile, the short-term sentiment in the NFT marketplace is tempered by falling floor prices for leading blue chip projects, as collectors seek to mitigate their investments in light of the contracting market.
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NFT royalties
The report suggests that “NFT royalties are becoming less relevant” as the market adopts a bearish stance, prompting creators to explore alternative income strategies.
Royalty fee transactions have significantly declined on both Blur and OpenSea, indicating that creators may need to develop new methods for generating income. In the competition between marketplaces, the report highlights that OpenSea’s user base is viewed as more organic and potentially more sustainable over time, while Blur’s dominance is largely driven by short-term whales.
Despite the decreasing floor prices for well-known NFT collections, blue chip projects have demonstrated some resilience during the bear market. Collections such as Bored Ape Yacht Club, Doodles, Mutant Ape Yacht Club, CloneX, and Moonbirds have all fallen over 64% from their all-time highs. Moonbirds has been the most affected, down 92% and 49% year to date.
Source: Galaxy
In its evaluation of the future of the NFT market, the report observed that the emergence of Bitcoin-based NFTs, known as Ordinals, is rekindling interest in the sector. Additionally, indicators to monitor for a resurgence in NFT activity include ERC-721 versus ERC-20 token transfers and OpenSea retail trading volume. It concluded that “until a major rebound, it’s a game for pros,”
The post NFT market a ‘game for pros’ in 2023 as volume declines appeared first on CryptoSlate.
