As suspected, global NFT trading volume dipped, and the month of March was a difficult one for the NFT space that may prompt the world to reevaluate NFT expectations
NFT Ecosystem: Rise and fall
The NFT ecosystem has witnessed one of the most insane growths in history, and in the space of one year, the total NFT sector ballooned from $95 million to $25 billion. As NFT enthusiasts and investors were celebrating the industry’s growth, in the back of our minds, we knew that such volumes were not sustainable or feasible in the long run.
One of the major problems of the NFT ecosystem is sensational reporting; people and media houses pick headlines that favor the narrative they are trying to push or headlines that are likely to get the most clicks from users. Over the last few days, since March ended, there have been many posts talking about how the NFT market dipped by 21% month-on-month or similar figures.
Unfortunately, people will see what they choose to believe, and more often than not, NFT critics look on the gloomy side of things to report what favors the narrative they are trying to push.
In March 2021, we witnessed a total of $387 million in transactions, and from March 2021 to March 2022, the NFT space grew by 493%, but most outlets chose to ignore this fact. Throughout this piece, we’ll look into the ups and downs of the NFT space over the last few months.
How far has the ecosystem fallen since its peak?
NFT sales peaked in August 2021 when we witnessed a “month for the ages,” and the sector peaked at 4.91 billion dollars. August 2021 also saw highs for projects, including the Bored Ape Yacht Club (BAYC), which amounted to $297 million.
From August to September 2021, the NFT market dipped by a third to the equivalent of $3.27 billion, and from September to December 2021, it declined a further 46% to $2.61 billion. If we take a step back and evaluate the entire NFT space, we can see that from its peak in August 2021 to March 2022; the NFT space dipped by 53%.
In August 2021, NFT sales clocked in at $4.91 billion, and in March 2022, it was a respectable $2.61 billion. What does this 53% volume dip mean for the NFT ecosystem?
Are we expecting too much from NFTs?
One of the primary reasons for the dip in NFT trading volumes is the number of unique buyers. We’ve witnessed a steady decline in the number of individual NFT buyers, and only 630,461 unique NFT buyers participated in the NFT space in March.
Total NFT transactions peaked at 6.8 million in January and February 2022; it dipped significantly to 5.45 million transactions in March 2022. After all, is said and done, are we asking too much of the NFT ecosystem? It isn’t possible to break records monthly, and it might be time for us to prepare for the new normal in the NFT market.