Non-fungible token (NFT) sales volume surged past the $4 billion mark in the last month, according to TradingPlatforms.com and data released by DappRadar. The top marketplaces for NFTs included OpenSea, Magic Eden, Axie Infinity, and CryptoPunks, with transactions on OpenSea accounting for over $3 billion of the sales alone.
OpenSea, which is supported by Polygon (MATIC-USD), saw its transactions volume grow by 20%. Other popular NFT marketplaces including Solanart, which is hosted on the Solana (SOL-USD) blockchain, and NBA Top Shot saw $53 million and $40 million in sales in the last month, respectively. However, with the recent market downturn in light of the Fed’s hinting at raising interest rates earlier this year as well as flagship cryptocurrencies like bitcoin (BTC-USD) and ether (ETH-USD) plunging to multi-month lows, questions remain as to whether this growth in the NFT space will be sustained.
According to Mason Nystrom, senior research analyst at Messari, a cryptocurrency analytics company that provides market intelligence for the industry, the NFT space may be better positioned than the recent cryptocurrency price movements suggest.
“The cryptomarkets are fairly correlated – the market tends to rise and fall with Bitcoin,” Nystrom told Yahoo Finance. “This has made it surprisingly interesting over the recent downturn as the NFT market has continued to increase in volumes. OpenSea has recorded $2.3 billion in NFT volume in January so far, on pace to break its monthly volume record if volumes continue.”
In addition to demonstrating strong transaction flow, NFT prices also appear to be “showing strength” amid macro concerns and the crypto selloff according to the Jan. 11 Crypto Daily Report released by independent research firm Fundstrat. The report noted that in the last seven days, the floor prices of Bored Apes are up 9%, while Doodles are up 47% and World of Women are up 56% in the same period.
What’s next for NFTs?
Despite the volatility that may present itself in the near term for NFTs due to current market conditions, Nystrom believes that the nature of these digital assets may lead to a decoupling of prices within crypto markets.
“NFTs are a significantly broad category that can include music, art, collectibles, gaming assets, fantasy sports, financial assets, and more. As such, it's possible that NFT commerce in one specific vertical grows while others decline or fluctuate over time,” he added. “Going forward it's possible that we'll see a greater decoupling of the crypto markets whereby one asset like art NFTs might perform well amidst the overall crypto market performing poorly or vice versa.”
In regard to major developments investors can look forward to, Nystrom pointed to Ethereum Layer-2 scaling and the growth of non-Ethereum Layer-1 blockchains as being catalysts that will further expand the NFT space. He also expects growth and popularization of new applications of NFT technology as the burgeoning sector continues to find footing.
“NFT gaming will likely continue to receive significant funding although it’s possible that valuations on some of these existing assets fall to more reasonable levels,” he said. “NFT financialization – NFT loans, liquidity, insurance, etc. – will also grow as users seek to ensure that their NFTs can either produce yield or remain as liquid as possible. The last quarter of 2021 and the onset of 2022 has already seen increased interest in different types of assets including photography and music NFTs.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV