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The NFT market will shrink in 2023, with daily trading volumes dropping significantly from all-time highs, according to a recent NFT report. report by Galaxy.
Ethereums price performance outperformed NFT projects, causing a long-standing positive correlation to break down. Nonetheless, NFT activity remains above its 12-month low in November 2022, with daily trading volumes declining monthly in 2023.
Within the NFT Marketplace sector, Blur has reached an all-time high of 80% trading volume dominance, largely driven by airdrop farmers looking to profit from the Season 2 token airdrop. The top 1% of Blur traders make up his 64% of the platforms trading volume, but only 20% on OpenSea.
OpenSea, catering more to the retail collector market, moved to attract professional traders with a professional trading platform and lower fees, resulting in a 23.7% (+52%) increase in trading volume. However, Blur decreased by 15%.
With whale activity on Blur skewing the user base towards professionals, with the top 1% of users accounting for about 64% of the platform’s trading volume, it’s a bold move for OpenSea to vie for the attention of professional traders. It’s movement. Meanwhile, near-term NFT market sentiment has been downplayed by lower price floors for top-tier chip projects as collectors de-risk their investments as the market shrinks.
The report says that “NFT royalties are becoming less important” as the market weakens and creators look for new revenue strategies.
With both Blur and OpenSea seeing a significant drop in royalty fee transactions, creators may need new revenue-generating strategies. As for the competition between marketplaces, the report notes that OpenSea’s user base is believed to be more organic and potentially more sustainable in the long run. At the same time, short-term whales are largely driving Blur’s dominance.
Blue chip projects have shown at least some resilience in a bear market, even as price floors for popular NFT collections have fallen. Projects such as Bored Ape Yacht Club, Doodles, Mutant Ape Yacht Club, CloneX, and Moonbirds are all down more than 64% from their all-time highs. The Moonbirds were the hardest hit, down 92% year-to-date and down 49%.
In assessing the outlook for the NFT market, the report noted that the introduction of Bitcoin-based NFTs, Ordinals, has sparked renewed interest in the sector. Additionally, notable signals for a resurgence of NFT activity are ERC-721 and ERC-20 token transfers and OpenSea retail trading volumes. He concluded, “It’s a professional game until a big rebound.”
