The NFT market is seemingly thriving The NFT market is seemingly thriving The NFT market is seemingly thriving

The NFT market is seemingly thriving

Summary:  There has been harsh fatigue in the crypto market in 2022 where each notable cryptocurrency has been covered in red. The non-fungible tokens (NFTs) space did apparently not experience the same fatigue, and the NFT market is seemingly thriving. Here we take a closer look at the market for NFTs.

We have previously acknowledged that non-fungible tokens (NFTs) arguably were the crypto trend of 2021, and the trend seems to continue into 2022. In short, NFTs are unique digital tokens stored on a blockchain such as Ethereum. NFTs are presently used to primary provide proof of ownership of digital art, but the outlook in terms of use cases is extensive. We are elaborating on potential use cases later, but first we zoom in of the thriving NFT market.

All-time high NFT trading volume

Some days ago, the monthly trading volume on the largest NFT marketplace OpenSea hit an all-time high, exceeding the previous all-time high of August 2021. In August 2021, around $3.4bn worth of NFTs were traded on OpenSea, whereas $3.9bn worth of NFTs has been traded this month to date.

One might think the increased volume is due to tanking NFT prices. However, some prices have seemingly been fairly stable since December. For instance, Bored Ape Yacht Club, the highly popular collectible of 10,000 unique NFTs, has followed the tanking of the Ether price by increasing equivalently in Ether, since there are quoted in Ether. Thus, the value in USD amount is approximately the same as in December.

Source: CoinGecko

Other NFTs collectives have had a rather constant price measured in Ether the last months, but declined value in USD due to Ether tanking. Surely, this is solely a fraction of the total NFT market, but as there is no price index measuring the value across the whole market, this stresses that at least the market has not tanked. This is remarkable since the NFT market is arguably more speculative than the crypto market itself. Not to mention that NFTs have surged in value the past year, so it was likely that holders would be nervous and take profit, particularly as their cryptocurrency holding has simultaneously decreased in value, possibly increasing their urgency to hold fiat.

In the case that NFT prices tumble, the question is how the market reacts based on its speculative nature and the fact that it is both illiquid and severely challenged by Ethereum’s scalability issues. As OpenSea’s trades are settled decentralized mainly on the Ethereum blockchain, each holder cannot simultaneously liquidate their NFTs. This will simply flood the Ethereum network with heavy transactions. The limited achievable selling will either tone down the panic selling or it will increase the eagerness to liquidate NFTs. In essence, nobody knows how the NFT market will react to heavy selling pressure as it has not experienced it yet.

MasterCard partners with Coinbase for its NFT marketplace

In October, Coinbase (COIN:NASDAQ) announced its intention to launch an NFT marketplace. With a verified client base of over 73mn clients alongside a liquid spot market, a respected custody solution, and great know-how on creating user-friendly interfaces to retail, Coinbase’s upcoming marketplace should become considerably more user-friendly than, for instance, OpenSea, which is likely to increase the broader interest in NFTs. For its NFT marketplace, Coinbase announced last week a partnership with MasterCard to let its clients purchase NFTs with their credit cards. At the same time, MasterCard said: “…Mastercard sees even greater potential for NFTs’ underlying tech to go beyond art and collectibles into many more areas”. The NFT marketplace was originally scheduled for launch in late 2021, however, there is no current launch date.

Twitter joins, YouTube and Meta might follow

Twitter launched last year the feature to be tipped in either Bitcoin or Ethereum. At the same time, Twitter announced its intention to let users verify NFTs and use them as profile pictures. Last week, Twitter fulfilled this as it launched the feature allowing users to show NFTs as a hexagon profile picture as a part of their $2.99 a month Twitter Blue subscription. This week Alphabet-owned YouTube hinted that it might develop various NFT features intended for creators to capitalize on. Likewise, Facebook owner Meta is rumored to let users verify NFTs and use them on Facebook and Instagram. The company is also rumored to be working on an NFT marketplace. Big tech’s entry into the NFT space will arguably make it even more accessible.

The outlook for NFTs

Looking at the outlook for the technology instead of the present NFT market, we suggest in our Outrageous Predictions from December that NFTs might take over the role of intermediaries such as Spotify, Apple Music, and record labels in the distribution of music. As we see it, there are countless other examples, where NFTs may act as proof of ownership, for instance, within wine, fashion, movies, gaming, real estate, patents, and tickets. NFTs can turn out to be the finest method for proof of ownership because it enables true authentication in a user-friendly manner, with the ability to easily track it back to the source and effortlessly transfer it globally. Besides that, you can leverage NFTs with other decentralized applications. With respect to patents, for instance, it is not unthinkable that you can eventually use them as collateral to borrow money fully decentralized. This is surely many years ahead if it will happen since it implies solving core challenges and diminishing uncertainties like scalability and regulation. However, the possibilities for NFTs are genuinely endless.

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