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

The NFT market is seemingly thriving

Mads Eberhardt

Cryptocurrency Analyst

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.

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.