On Thursday morning Chainanalysis published a detailed report analysing the state of the NFT market throughout 2021 and the first quarter of 2022.
Even though it seemed that the market crashed in February, it has stabilized by May, as NFT activity ebbs and flows month to month, the report says. In 2022, collectors have already spent over $37 billion in NFT marketplaces; in 2021, a total of $40 billion was spent.
The general tendency is that the market is getting bigger. The number of active NFT buyers and sellers is growing. In the first quarter of this year, 950,000 unique cryptocurrency wallet addresses, which represent users conducting transactions, bought or sold an NFT, Chainalysis found. That’s up from 627,000 in the fourth quarter of 2020.
As of May 1, around 491,000 addresses have bought or sold NFTs in the second quarter of 2022, which could easily top first-quarter numbers, according to the report.
In 2021 the market growth was stimulated by the newcomers, whereas in 2022, NFT trading volumes were mostly generated from the established “blue-chip” projects, like CryptoPunks and Bored Ape Yacht Club and its related projects, according Modesta Masoit, finance director at DappRadar.
NFTs look to be entering perhaps one of many maturity stages. We expected this and believe it's a normal development in such technology,” Masoit said.
The vast majority of NFT transactions are under $10,000 in cryptocurrency. NFT collector-sized transactions (between $10,000 and $100,000) grew significantly as a share of all transfers between January and September of 2021, but since then have stayed flat.
As for the geographic distribution of NFT activity, the reports states that the market has become truly global in 2021.
“We see a strong mix of web visits from several regions, with Central & Southern Asia, North America, Western Europe, and Latin America leading the pack. The numbers suggest that like conventional cryptocurrency, NFTs have achieved global popularity, with no region making up more than 40% of monthly web visits since March 2021.”
Central and Southern Asia and North America continue to lead the market, while the share of Western Europe has significantly dropped since the first month of 2021.
Web traffic from the Middle East saw a spike mid-2021, but then dropped back and currently accounts for about 5% of the global market.
In the previous report, published in January 2021 the report went on analysisng the performance of NFT collectors and their strategies. As a conclusion, the authors warned about the potential losses investors may suffer in the market.
“NFTs represent one of the most exciting, fast-growing areas of the cryptocurrency world, and have become especially popular with retail investors. However, those looking to collect and trade NFTs must understand how competitive the market is. The data shows that a very small group of highly sophisticated investors rake in most of the profits from NFT collecting.”