Sales of non-fungible tokens (NFTs) have risen above $4 billion in the past month, according to TradingPlatforms.com and data from DappRadar. The top markets for NFTs included OpenSea, Magic Eden, Axie Infinity, and CryptoPunks, with transactions on OpenSea totaling more than $3 billion in sales alone.
OpenSea, backed by Polygon (MATIC-USD), has seen its transaction volume grow by 20%. Other popular NFT marketplaces, including Solanart, which is hosted on the Solana (SOL-USD) blockchain, and NBA Top Shot saw sales of $53 million and $40 million in the past month, respectively. However, with the recent market pullback in light of the Federal Reserve hinting at a rate hike earlier this year, as well as major cryptocurrencies like Bitcoin (BTC-USD) and Ether (ETH-USD) dropping to multi-month lows, Questions remain as to whether this growth in the NFT space will continue.
According to Mason Nystrom, Senior Research Analyst at Messari, a cryptocurrency analytics firm that provides market intelligence to the industry, the NFT space may be in a better position than recent cryptocurrency price movements suggest.
“Crypto markets are somewhat interconnected — the market tends to go up and down with Bitcoin,” Nystrom told Yahoo Finance. “This made surprisingly interesting during the recent downturn as the NFT market continued to increase in volumes. OpenSea recorded $2.3 billion in NFT volume in January so far, on course to break the monthly volume record if volumes continue.”
In addition to showing strong transaction flow, NFT prices also appear to be “showing strength” amid macro fears and crypto selling according to a daily Crypto report released on January 11 by independent research firm Fundstrat. The report noted that in the past seven days, the minimum prices for bored monkeys have increased by 9%, while doodles have increased by 47% and women’s world by 56% in the same period.
What’s next for NFTs?
Despite the volatility that may appear in the near term for NFTs due to current market conditions, Nystrom believes that the nature of these digital assets may lead to a price decoupling within the crypto markets.
NFTs are a hugely broad category that can include music, art, collectibles, gaming assets, fantasy sports, financial assets, and more. As such, it is possible for NFT trading in a particular sector to grow while others decline or fluctuate over time.” “Going forward, it is possible that we will see a larger decoupling of the cryptocurrency markets where an asset like Art NFTs may do well amidst the performance of The overall crypto market is poorly done or vice versa.”
Regarding key developments that investors can look forward to, Nystrom cited the expansion of the Ethereum Layer-2 scale and the growth of non-Ethereum Layer-1 blockchains as catalysts that will further expand the NFT space. He also anticipates the growth and popularization of new applications of NFT technology as the booming sector continues to find its foothold.
“NFT Games will likely continue to receive significant funding although it is likely that valuations on some of these existing assets will drop to more reasonable levels,” he said. “NFT financialization – NFT loans, liquidity, insurance, etc. – will also grow as users seek to ensure that NFTs are able to produce a return or retain liquidity as much as possible. The last quarter of 2021 and the beginning of 2022 have already seen increased interest in different types of assets including Including Photography and Music NFTs.
Thomas Home is a writer for Yahoo Finance. Follow him on Twitter Tweet embed
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