According to an article in the Wall Street Journal, the non-fungible token (NFT) market is “collapsing,” while conflicting evidence shows that the market is consolidating.
NFT sales have declined by 92% since their all-time peak in September 2021, according to statistics from the market research platform Nonfungible, referenced in the article. The report also suggested the number of active wallets in the Ethereum (ETH) NFT market has dropped by 88% since November 2021.
“The NFT market is crumbling,”
Stated the WSJ article.
What does the data say?
In the same week, when the WSJ story claimed that sales of NFTs are “flatlining,” the top five collections alone accounted for more than $1 billion in primary and secondary sales.
The article above indicated a low number of NFT users and transactions. However, on-chain data from Dune Analytics’ dashboard suggests that the market is still thriving.
On the first day of May alone, OpenSea, a well-known marketplace, saw approximately $550 million in volume on Ethereum NFTs in USD, according to analytics.
Tom Schmidt, a partner at Dragonfly Capital, analyzed OpenSea transactions and USD volume and found a similar story.
The @WSJ just published an article claiming that NFT transactions are flatlining, which appears to be totally based on incorrect data from https://t.co/LFpkjZGBiI (compare with on-chain @DuneAnalytics data). Did no one bother to check primary sources? Also why not $ volume? pic.twitter.com/WRBw1eChazMay 3, 2022
Which NFTs are Driving the Volume?
NFT market subsectors are emerging, and while certain segments of the oversaturated market are in decline, others are experiencing huge advances.
According to Nansen’s analytics engine, the “Blue Chip” NFTs, such as the Bored and Mutant Ape Yacht Club and Azuki tokens, outperform art and gaming tokens, categorizing NFT collections.
The Nansen Blue Chip-10 Index, which tracks the top 10 NFT projects, is up 81% year to date (YTD), while the indexes tracking the top NFT art and gaming collections are down 39% and 49% YTD, respectively.
In late April, NFTstatistics.eth posted a graphic revealing that the top five collections are driving the Ethereum NFT market, and this phenomenon was highlighted.
This trend continues: BAYC, Azuki, CloneX, Doodles & now Moonbirds separating themselves from everyone else.
I've talked about large-caps outperforming, but it's really the top-5 projects driving all the gains. pic.twitter.com/UsUlwHMJ9MApril 26, 2022
An anonymous market researcher at NFTstatistics says: “There’s certainly a pattern right now where five or six of the most successful projects are substantially outperforming while the rest are flat to down.”
As of May 1, Nonfungible reports an increase in sales and active wallets not seen since November 8, 2021, which correlates with the record-breaking May 1 sales (and Ethereum breaking) NFT sales are not “flatlining,” as Yuga Labs’ sale of metaverse land proves.
So, Why did WSJ Claim Otherwise?
The addition of sales figures from the P2E game Axie Infinity by Nonfungible could explain why the WSJ relied on Non Fungible statistics that are out of sync with Dune.
CryptoSlam data shows that the popular play-to-earn reached an all-time high volume on November 4, 2021, of over $40 million before a slow fall to current levels of approximately $500,000.
But to pass judgment on the whole NFT market based on the statistics of a P2E game is hardly credible! So, “collapse of a P2E game” is a better message than “NFTs are collapsing”!
What else is Cooking in the NFT Marketplace?
Solana is quickly becoming a popular blockchain for NFTs and is currently the second-largest blockchain for NFT sales volume behind Ethereum.
OpenSea tracked Okay Bears purchases, a Solana NFT project, for the first time last week. And the Solana NFT project not only topped the 24-hour sales but is now on no. 4 in rank, just behind Mutant Ape Yacht Club on CryptoSlam in 7-day sales volume with almost $47 million worth of transactions!