Like cryptocurrencies, the NFT market has witnessed a roller coaster ride in 2022. Here’s all you need to know about it
Non-fungible tokens, or NFTs, were all the rage in 2021, soaring to astronomical heights along with skyrocketing cryptocurrency prices. However, cryptocurrency prices fell off a cliff in 2022, throwing cold water on the NFT market. Prices have fluctuated dramatically since then, and trading volumes have been far below those seen in 2021.
NFT Transaction Volume in 2022
Overall, NFT transaction volume in 2022 slowed down dramatically. From January 2022 to September 2022, NFT trading volume collapsed by 97 per cent, from $17 billion in value to just $466 million, according to data provided by Bitay.
In June 2022, the total number of daily sales was about 19,000, with a value of just $13.8 million. From March through June 2022, the total NFT market cap fell by 40 per cent, while trading volume collapsed by 66 per cent — right in line with falling cryptocurrency prices, particularly of Ethereum.
May 1, 2022, was still the single-highest value trading day in NFT history, when 118,577 NFTs were sold for a total value of $780.4 million. But, as the crypto market has continued to linger in a “crypto winter ,” NFT prices and transactions have not shown any serious signs of recovery.
Kameshwaran Elangovan, co-founder & chief operating officer at GuardianLink said that they have also seen a lot of brands get into the metaverse space, floating their own digital collectibles, and thus, opening the way for completely digital interactions for their audience in the Web 3.0 space.
“Recognising the potential of Web 3.0, the relevance of decentralised customer interaction, and the need to give exclusive digital experience to customers in the metaverse, brands like Nike, Flipkart, Pepsi, Bulgari, and even Louis Vuitton started to create unique digital experiences for their customers facilitated by NFTs,” he says.
Top Dollar NFT Sales in 2022
Even though the NFT market dried up to some extent in 2022, there were still plenty of notable high-dollar sales. In fact, given the way the crypto market completely imploded beneath it, the NFT market actually held up fairly well, at least in terms of high-dollar sales.
Here are the top-dollar NFT sales in 2022:
XCOPY’s All-Time High in the City, January 2022: 1,630 ETH ($6.2 million at time of sale)
CryptoPunk #5577, February 2022: 2,501 ETH ($7.7 million at time of sale)
CryptoPunk #5588, February 2022: 8,000 ETH ($23.7 million at time of sale)
Julian Assange and Pak’s Clock NFT, February 2022: 16,953 ETH ($52.7 million at time of sale)
CryptoPunk #5588 was the highest-priced CryptoPunk NFT ever sold. That said, there were no top-dollar sales of NFTs after February 2022, which is a clear indication that the NFT market began to recede as the year wore on.
What Lies Ahead in 2023?
Amanjot Malhotra, country head - India, Bitay, says that while there’s no doubt that the NFT market has taken a serious hit in 2022, some very bullish analysts and industry insiders still see 2023 as being much kinder to the market.
This hope rests on the fact that NFTs are a crucial part of the digital economy, which seems destined to expand, even if it doesn’t become the “parallel universe” equally important to today’s market that some predict.
The theory behind this bullish outlook is that NFTs will continue to be adopted by video games, artwork, music, and digital collectible industries. NFTs may indeed have staying power if life becomes more virtual in the coming years, in a sense that consumers use virtual assets in the metaverse. A report from Verified Market Research also projects that the market value of NFTs will jump to $231 billion by 2030.
However, prices likely will need to reverse course before the hype returns to the sector. In November 2022, Google reported that searches for NFTs have dropped by 88 per cent in less than a year, perhaps the best real-world indicator of how interest in the sector is waning.
“The question investors have to answer for themselves — in conjunction with a financial advisor — is whether the plunging prices and trading volumes in 2022 are an indication of a wash-out bottom or just the beginning of the pain in the sector,” Malhotra adds.