The smoke from the NFT marketplace left last year, can be seen picking fire in mid-2022. As we all know, the Non-Fungible Tokens started cooling down in May 2021 after the big explosion in March 2021. Only 19.4 million USD in NFT was sold in the last week of May 2021 compared to 170 million USD in the peak time. Further, it was recorded that in September 2021, nearly 2,25,000 NFTs were traded every day. However, in May 2022 a big decline was seen in this number to 19,000 NFTs only. There was a significant decrease of near 88% in the number of active wallets. So, is there any possibility that NFT will recover?
NFTs are cryptographic assets that have a unique identity and are stored on the blockchain. The year 2021 escalated both demand and supply of the NFT. The art market played a huge role when big auction houses decided to take the artwork online and started selling NFT art. This established the NFT in the industry significantly. It was recorded that the NFT trading market reached nearly 40 billion USD in 2021 and is expected to grow by 147.24 billion USD by 2026.
However, the report released by Chainalysis on 5th May 2022 stated that there has been a steep decrease in NFT trading. While the NFT marketplace has been a roller coaster ride for artists and traders, hackers and scammers are also interested in it. During an investigation, it was found that the issue of uploading and trading others’ artwork as NFT has risen the most. Hackers try to attack the NFT accounts in order to steal their assets and then sell their own NFTs over the hacked social media accounts. It was also reported that few people try to repeatedly auction and trade their own NFTs in order to drive up their value.
Besides the negatives, there are many positive signs of recovery also. The digital artist called Beeple established history in the NFT marketplace by auctioning off the NFT for 69.3 million USD in 2021. Further, a person named Brittany Pierre earned nearly 109,000 USD for selling NFTs of her photography. Apart from irregular fluctuation in the NFT marketplace, if we look at the annual picture it can be seen that the number of active NFT buyers and sellers has been growing since the second half of 2020. In the first quarter of 2022, the number of unique addresses that bought or sold NFT was nearly 950000 compared to the fourth quarter of 2021, which were only 627000, hence, expanding the NFT marketplace.
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So, coming back to the question “Will the NFT market increase in value?”. The answer to this is a big yes. Despite the uncertainties in the NFT market, one thing can be concluded: it will be a primary component of the future of the art world. Apart from art, it is also expanding in other industries as it keeps on fascinating new entrants. For instance, in May 2022, Starbucks announced that they are planning to form a “global digital community” that will be accompanied by the NFT loyalty program. Also, Coinbase which is one of the biggest cryptocurrency trading platforms is about to start a new NFT exchange for users.
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