The NFT market took a rather significant hit in 2022 despite reaching peak trading volumes at the beginning of the year. Since then, volume has fallen by more than 94% as investors move away from these illiquid assets. However, there has been an increase in NFT volume in recent months, so is the NFT bull market back?
What the Data Says
Looking at the data from IntoTheBlock, it shows that there has been an increase in NFT trading volume over the past month but this has not been a stable growth. In fact, the chart shows more of a zig-zag pattern which means volume has seen highs and lows during this period.
The daily trading volume at the beginning of December was at $33 million and on December 29, this figure became $47 million. So this represents around 42% increase in trading volume in 30 days. However, zooming out and looking at the 7-day chart shows a more bullish move.
Standing at $20 million on December 25, there has been an increase of more than 100% in daily volume over the past week. This explains the renewed enthusiasm in the NFT market this week, but it does not mean that the NFT bull market is back.
Volume grows 42% in December | Source: IntoTheBlock
The fact remains that the number of NFT sales has nosedived in the past few days, with 63,000 new sales on Thursday compared to Wednesday’s 123,000. So, while the dollar figure volume may be rising, investors are still buying fewer NFTs and the number of collections is also falling.
NFT’s Popularity Still Declining
As with any new board, the popularity of NFTs is largely driven by the adoption of new users. This led to the peak in January 2022, but it has not been able to maintain the momentum. According to IntoTheBlock, the number of new addresses buying NFTs is decreasing.
Market declines over 60% in 2022 | Source: Crypto Total Market Cap on TradingView.com
As of Thursday, December 29, only 5,780 new addresses were using NFT, reaching a two-year low. The last time this was the lowest was in February 2021 when non-fungible tokens were still trying to establish themselves in the crypto market.
The collection made has also been short for a year. Only 675 new collections were made on Thursday, down from November 2021 levels. Another important metric includes the number of unique collections purchased which is 111 for the same period.
On a more encouraging note, the XRP NFT market has seen an uptick in adoption. Friday, that is crossed 7.3 million XRP tokens in total sales volume.
Option images from APS Software, charts from TradingView.com