In the current bear market, looking back at the market performance in the past year, we can find that all tracks are very sluggish compared with last year's bull market. Common data such as total transaction volume, transaction value, market capitalization, and TVL reflect market lows. However , key data dimensions such as the number of developers and users reflect the high activity of the market and the rapid development of the industry.
We clearly recognize that developers under the bear market are still pioneering, and Web3 under the bear market has also precipitated and accumulated more technologies and products. Today we will review together how the annual data performance of the NFT track that has rapidly cooled down in the bear market in 2022 after the explosive growth in 2021. And from these data, we can know the directions worthy of attention in the NFT track in 2023 and the options suitable for developers to lay out in advance.
2022 NFT Market Review
In order to better review the NFT market situation throughout 2022, we summarized and referred to the data records of NFT data platforms such as NFTGO, and extracted the NFT annual reports of platforms such as Footprint and Ancient8. The article will conduct an annual review from industry-side data such as total transaction volume and search volume and user-side data such as the number of users. First, let us review the total market value of NFT. According to the data disclosed by NFTGO, the total market value of NFT will peak in February and March at the beginning of 2022. After the peak time point, the overall market value showed a downward trend. At present, the total market value of the NFT industry is about 22 billion USD.
Compared with the outbreak peak in 2021, the monthly NFT market value in 2022 will continue to slump, averaging no more than 500 million USD per month.
Trading volume
From the perspective of transactions, NFT transaction volume has had two transaction peaks in the past year, namely January 13, 2022 and May 1, 2022. Sales in the first week of May reached 1.8 billion US dollars, After hitting a new high for the year, it fell into a continuous decline. At present, the daily trading volume of NFT is basically hovering around 60 million USD.
The NFT market has been declining since the peak trading volume until the end of the year, and there is no obvious sign of recovery, because in the bearish macro market, the cryptocurrency market suffered a series of black swan events of Terra, Celsius, 3AC and FTX. The NFT market is in a downward trend due to the general market situation.
Contrary to the sluggish trading volume, the number of holders and traders continues to rise, which represents the active trading behavior of users under the sluggish market situation. And from this data, we can also see the positive signal that the market has enough and continuously growing users.
popularity
By the end of the year, NFT searches had dropped about 90% from their peak in January, implying that interest in digital collectibles has cooled during the bear market. Search volume for NFTs is rated on a scale of 1-100, with 100 being the peak search. The search trend is basically consistent with the ups and downs of the NFT market capitalization market.
NFT Interest by Region in 2022
According to the NFT report released by Ancient8, four-fifths of the five most popular NFT regions are Asian countries, and the remaining one region is located in Africa. China searches for "NFT" the most on Google. NFT, often called "digital collections", faces a more stringent market environment in China, but this has not affected users' attention to the NFT market.
NFTFi
As the name suggests, NFTFi is a combination of NFT and DeFi. NFTFi uses NFT to acquire more liquid assets to finance transactions. The combination of DeFi and NFT is to open up many possibilities for NFT holders by making NFT a more liquid asset. NFTFi's innovation allows NFT holders to put their idle digital collectibles to use to earn income, making them more liquid. Some notable use cases for NFTFi include NFT splits, NFT leasing, NFT derivatives, and NFT lending. While NFTFi solves the liquidity problem, it is still prone to exploits and pricing issues.
According to the data in the report, NFTFi also failed to achieve the expected goal, mainly due to the overall market downturn and declining liquidity . However, the market value of blue-chip NFTs (BAYC, CryptoPunks, Azuki, Moonbirds) is very rich, with a total valuation of about 3.5 billion US dollars, which motivates NFTFi builders and developers, and will also attract more developers to join. The picture below shows the current market structure of NFTFi.
trading platform
The six major NFT market participants are OpenSea, Genie, Gem, LooksRare, Blur, and X2Y2. OpenSea continues its decisive position, dominating the NFT market in the first half of 2022, with record trading volumes of $3 billion in February and April. However, dark horses in the NFT market in 2022 will appear frequently. The newly established platform X2Y2 has entered the NFT trading platform structure and has gained greater market attention. At its peak in July, X2Y2 traded a whopping $170 million, making it the second-largest player in the space in one fell swoop.
Transaction volume of the NFT market in 2022 (Source: Dune Analytics)
In addition to X2Y2, the "dark horse" Blur also has a brilliant performance. Blur is a trader-focused NFT marketplace powered by Paradigm. Despite a late start, Blur overtook OpenSea as the number one NFT trading platform in December and now holds more than 50% of the market.
In addition to the above data, major reports also disclose more detailed and diverse data, such as weekly trading volume. However, the overall situation is still consistent with the conclusions drawn above. Affected by the macro market, the overall data in 2022 is lower than that in 2021, showing a continuous decline. However, key indicators such as the number of traders, developers, and trading platforms also let us see At the "tip of the iceberg" under the market, the NFT market is still accumulating under the iceberg, waiting for the next explosive peak.
PFP NFT project
The most important and popular of NFT is the "PFP" project. PFP (Profile Picture) NFT refers to an NFT used as a personal avatar. Some NFT players will use this NFT for social media such as Twitter, Facebook, and Instagram to express their social and economic status or belonging to a certain community , so that the popularity of PFP NFT has reached an unprecedented level. The price of PFP NFT ranges from low to high. Currently, the most expensive PFP NFTs are BAYC and Moonbirds. Sales of PFP NFT are still high this year, and have now exceeded $5 billion. In addition to reviewing the overall data of the NFT market, we also summarize some outstanding PFP NFT projects in 2022.
Bored Ape Yacht Club
Originally minted at an initial price of 0.08 ETH in April 2021, there are about 10,000 apes in series, which can be regarded as one of the most successful NFT projects in history. The current price of BAYC is 68 ETH/unit, and the total sales volume is 717K ETH. BAYC's best performance was in April, with a total volume of 41.9K ETH.
Azuki
Azuki is one of the most popular NFT projects in 2022, and its community development and construction have performed very well in the bear market. Released in January 2022, Azuki is a collection of 10,000 anime-style avatars. Within a month of its release, Azuki's sales reached $300 million, and its total sales even surpassed CryptoPunks and BAYC at one point. Azuki will explode in popularity in late March 2022, with a reserve price close to 40 ETH.
Moonbirds
The series is described as a "utility-enabled PFP with extremely rich and unique rare features". Moonbirds' attractive pixel art design and PROOF Collective's reputation helped the project attract a lot of attention from the community. After launching in April 2022, Moonbirds has grossed $238 million in sales, making it one of the highest-grossing projects in NFT history. To date, the top 10 most expensive Moonbirds sales have all exceeded 100 ETH, with the most expensive transaction going for as much as 350 ETH.
Valhalla
Valhalla, a “crypto-native brand for global gamers,” hit social media here in late 2022. Valhalla's 10,000 PFP Avatars became a hit on the secondary market after the November mint, joining CryptoPunks and BAYC in the top three. Valhalla now has 3.4K unique owners with a total transaction volume of 11.6K ETH.
Reddit Collectible Avatars
A collection of 40,000 avatars launched by Reddit, the project is arguably the first real-world example of the Web2 social media giant entering the crypto space to bring NFT PFPs to the masses. It's worth mentioning that Reddit uses the term "digital collectibles" instead of NFTs. At launch, Reddit managed to sell out all of their digital avatars and get 2.5 million Reddit Vault wallets created on their marketplace. A highly accessible platform coupled with an affordable price point (around $10) helped the series reach the multi-million dollar mark and gross $12 million in sales.
Outlook for 2023
Looking back on the past two years, the NFT market has made great progress and improvements. In 2021, explosive growth will enter the mainstream view. In 2022, although affected by the market, the overall development will still be in a spiral direction, and technologies and products will be better accumulated and precipitated. Looking forward to 2023, what trends will NFT have? What spaces will developers have access to?
NFT PFP Trends
Judging from the PFP popularity trend highlighted in the previous article, PFP NFT will still become a popular project in the community and ecology. From the data point of view, in 2022, compared with the previous year, user interest in NFT PFP has increased by 509% , bringing the current search volume of this term to 1.8K searches per month. Due to the characteristics of PFP NFT's strong community, unique utilities, partnerships, and valuable collectibles, the PFP NFT project will continue its popular trend in 2023.
AI and Fragmentation
The combination of artificial intelligence and NFT is also likely to explode its potential in 2023. AI attributes will give NFT a more unique and dynamic experience. At the same time, NFT fragmentation is also a new trend worthy of attention. Fragmented settings can make high-value NFTs more liquid, and investors have more investment portfolios and choices. Increased market liquidity will also lead to a more stable uptrend.
Web2 + NFT
The 2022 World Cup in Qatar, which is still hot, has launched many NFT projects, such as Coca-Cola’s NFT AirDrop at this year’s World Cup. Web 3 gaming company Limit Break has also revealed plans to offer free casting at next year's Super Bowl event, among other things. Web2 + NFT has already had successful use cases , and major Web2 giants have also laid out and launched NFT.
With the amazing potential brought by the unique attributes of NFT, the Web3 and Web2 industries use NFT for marketing to connect with consumers through physical and digital media; while achieving marketing purposes, NFT and Web2 games, brand IP, knowledge products, etc. The combination of NFT also shows the various functions and playing methods of NFT. Reddit allows the integration of NFT avatars, Twitter allows the display of NFT avatars, and Instagram supports the casting and publishing of image content as NFTs.
NFTFi
The prospect of NFT in the field of financial services cannot be ignored. The NFT market liquidity and richer investment options brought about by the combination with DeFi will also attract more encrypted users. Therefore, NFTFi will still be one of the focuses in 2023. Exploring NFTFi and opening up more possibilities will also bring a field of more opportunities and advantages for developers who are looking for space to enter NFT.
epilogue
Behind the astonishing data that the NFT market size has plummeted by 92%, it is not possible to draw the conclusion that the NFT track is sinking. The more during the bear market, the projects with practical value and technical prospects rise one by one, providing more possibilities for the encryption world. This year's NFT market has ushered in exciting projects in various fields such as Azuki, Moonbirds, Skyweaver, and DigiDaigaku, which has led to the outbreak of new markets and platforms such as X2Y2 and Blur. NFT will still have NFTFi, AI + NFT, etc. in 2023. potential direction of development. Although the encryption field under the current bear market presents a sluggish market situation, the potential and prospects shown in the NFT track are still unlimited. From the user's point of view, 2022 will not be affected by its declining market value. Instead, it can be regarded as a continuous effort after the first year of NFT, which is a very successful year for NFT.
