Low stakes and new trends. What's going on in the NFT market

Crypto winter and general trends of the crypto market inevitably affect all of its areas. Non-fungible token (NFT) sales volume sagged 77% in the third quarter of this year, while demand for high-value collections and tokens purchased for millions of dollars has fallen to its lowest level.

Daily NFT trading volumes for the current year are down 90% from their January peaks. According to NonFungible, there were 19 000 transactions totaling $11 million on the market as of October 18, while at the beginning of the year the daily market turnover exceeded $180 million.

Some of the high-profile expensive collections, such as Fidenza, retain the prices of the period of high excitement on the market. However, in general, there are no big sales, including popular NFTs, such as CryptoPunks or Bored Ape Yacht Club (BAYC). Users of the OpenSea Marketplace make rare offers to buy images from collections, but their rates are much lower compared to the purchase prices of current owners.

Last May, the most expensive NFT from the Meebits collection was bought for 700 ETH (over $2,5 million at the exchange rate at the time of the trade). Under current market conditions, the largest offer for a token on OpenSea was a bid of 92 ETH.

The most expensive NFT in the Meebits collection

Source: Opensea.io

In other collections, image owners also receive offers incomparable to their purchase price. The most expensive NFT in the Invisible Friends collection was purchased in March of this year for 200 ETH. The highest bid for an image purchase for October 18 is 6,5 ETH. An NFT from the Pudgy Penguins collection, which cost the owner 400 ETH in August, is bid 5 ETH.

The most expensive images in MekaVerse, Moonbirds and other collections also receive relatively low bids. Offers to buy single works by popular NFT artists like Beeple or XCOPY on the OpenSea site are similarly tens or even hundreds of times lower than the price paid by their current owner.

Finally, Jack Dorsey's first NFT tweet, bought by Bridge Oracle founder Sina Estavi for $2,9 million in 2021, is being offered for just 0,95 ETH ($1253 at the time of publication).

Cheap tokens

At the same time, there is more activity in the lower price segment of the NFT market. Collectors surveyed by Bloomberg see more potential in relatively inexpensive tokens compared to NFTs with high market capitalizations. According to NonFungible, in-game NFTs and tokens from unpopular collections have seen a smaller percentage drop in value than market leaders.

The decline in sales of non-fungible tokens is primarily attributed to the general state of the crypto market and the fall in crypto-asset prices from their November 2021 all-time highs. At the same time, regulators admit that NFT trading could fall under securities law. The Securities and Exchange Commission (SEC) is investigating Yuga Labs, creator of the NFT collection BAYC, while writing record fines to celebrities seen promoting crypto projects.

In comments on the state of the market for Bloomberg, NonFungible co-founder Gauthier Zuppinger explains the low activity in the market with the fact that the NFT space is “not a super interesting space for short-term trading” at the moment. This, in turn, is changing the competitive environment for trading platforms. Buyers are looking for bargains outside of OpenSea, and many new collections are debuting on the Solana blockchain (SOL).

While back in March OpenSea had a market share of 85%, in September, according to DappRadar, the platform was picking up 38% of trades. Competing marketplaces showed rapid growth in the same period. Magic Eden's market share rose to 13%, though it was less than 1% at the beginning of the year, while x2y2 took over 30% of NFT's trading volume.

The attractiveness of Magic Eden is also attributed to the lower average cost of a token ($43 versus OpenSea's $82). We can assume that low-cost NFTs are more attractive for short-term trading, and only a few market participants can afford to invest hundreds or even millions of dollars in sensational collections.

On September 19, a record number of NFTs were issued. According to Delphi Digital, the number of cryptocurrency wallets that store non-fungible tokens exceeded 6 million, double the number at the beginning of the year when there was still massive hype around NFTs. Nansen service analyst Martin Lee attributes this primarily to the growth of smaller collections with low prices. At the same time, he says, blue-chip NFT markets like BAYC, Azuki, CryptoPunks, or Doodles still account for more attention and accumulated value, despite falling sales and investor sentiment.