Year-Ender 2023: From not fungible to fungible; the NFT economy

Data provided by CoinMarketCap, a crypto price-tracking website, showed that in the first quarter of 2023, NFT trading volume witnessed an upward trend but then fell. The website also mentioned that the fall in value was accredited to airdrop and incentives on the part of Blur, an NFT marketplace. From what it’s understood, OpenSea, an NFT marketplace, controlled the maximum share of the NFT royalty market which was overtaken by Blur in February 2023, and was equal to it in March 2023. It’s believed that on February 22, 2023, OpenSea enhanced the trading capacity of NFTs which increased to 74,550 Ether (ETH). Reportedly, within 12 months, the total number of NFT holders fell to a minimum of 11,187 traders, on April 19, 2023. As per NFTGo, an NFT analytics and trading platform, despite the fall in the count of NFT holders on April 19, 2023, the approximate number of NFT holders witnessed a 12,62% rise in April, which took the total count to 4.3 million in that month. Going by market reports, blue chip NFT projects recorded a downfall in their floor price, as was seen in the case of Bored Ape Yacht Club (BAYC), which saw its floor value fall by two-thirds from its highest value worth 153.7 ETH in April, 2022, to less than 50 ETH. 

“I think close to 70% of NFT projects experienced a fall in the floor price. This scenario has seemingly prioritised the significance of market assessment. Whale activities and their trade behaviour are also influencing the NFT Market which is considered to be proving difficult for small buyers to make a purchase decision in response to such whale-driven incidents. Reportedly, media coverage of fraudulent activities around NFTs has brought awareness among buyers. Further, buyers should keep a watch on pricing trends, sale volume and price inflation if any with the collection of their interest,” Saravanan Jaichandaran, co-founder and chief data scientist, bitsCrunch, an AI-enhanced decentralised NFT network, specified. 

Despite everything, market research has shown Ethereum’s NFT market dominance, as it constituted over 50% of total transactions in 2023 which resulted in a one to two million worth monthly transaction volume. According to CoinDCX, a crypto investment application, November of 2023 brought positive signs for the NFT market which increased belief among traders, on account of a fall in NFT holding timelines, an increase in trader profitability which benefitted 41% of traders, and top collections’ recording an increase in floor prices. Insights provided by the application mentioned factors which impacted the NFT market in 2023, them being Cryptopunks, an NFT collection, securing high amount of sales with a Cryptopunk artefact clocking $1.1 million, Herbert W Franke’s Zentrum NFT collection’s sale of 222 NFTs totalling to 613 ETH worth total revenue, and Jack Butcher Trademark’s NFT collection selling 10,000 NFTs which resulted in 690 ETH worth trading volume. It’s believed that the top 500 collections clocked an increase in floor prices, which increased by 42% within a particular month. However, 2023 signs have shown peak one percent of NFT projects constituted more than 50% worth total market capitalisation which has shown the need for uniform segregation of the value. 

Furthermore, Statista, a data and business intelligence platform, showed that the total amount of revenue from the NFT sector is expected to reach $1,681 million by 2023. The platform also highlighted that the average revenue per NFT user has reached $118.20 in 2023, with a user penetration worth 0.2%. For 2024, market experts have indicated the need for utility-oriented NFTs to take centre stage, along with the enhancement of cross-chain interoperability and decentralised finance (DeFi) offerings. “I consider that NFTs offer a safe and secure platform to prove authenticity and ownership of assets. People have seemingly started to realise the benefits of crypto, and platforms supporting these use cases are beginning to show up. Artists in the music and art industry are believed to be finding ways in which they perpetually earn money as royalties through blockchain smart contracts,” Siddharth Ugrankar, CEO, Qila.io, a tokenisation platform, concluded.

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