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NFT: transactions down in first quarter

Published on April 19, 2022 - 3 mins reading time
Individuals Startup/innovation

The total value and average amount of NFT transactions soared in 2021. However, volumes stalled in Q1 2022, with transactions down 6% quarter-on-quarter to $7.8 billion, from $8.3 billion last December.

What are NFTs?

NFTs (Non Fungible Tokens) are digital property titles issued primarily by the Ethereum Blockchain and associated with a digital asset that certifies its non-interchangeability. In other words, each NFT is unique and cannot be reproduced.

The assets represented by NFTs are diverse: digital or physical works of art, tweets, virtual trading cards, Gifs, short videos or music clips by authors...

NFTs can be bought and sold like any other type of asset. Their value is determined by supply and demand.

 

Sales on the rise in 2021

While sales in the first two quarters of 2021 totaled just $2.5 billion, they soared in the following months, to $10.7 billion in Q3 and $11.6 billion in Q4. Data recorded by OpenSea, a marketplace dedicated to NFTs, show that sales reached two peaks in August and December.

Several players have been able to capitalize on this growing craze for the sector, including Dapper Labs. Founded in 2018, the company is behind CryptoKitties, an online game that lets you sell, collect and breed different types of virtual cats, and NBA Top Shot, a platform dedicated to the purchase of player cards or videos of moments marking a basketball game. In France, startup Sorare raised the largest amount of capital in the history of French Tech, with $680 million in financing, valuing the company at $4.3 billion.

A market in decline

After exploding in 2021, the NFT market has declined. In fact, the number of transactions has fallen very rapidly, from 14.04 million sales in Q4 2021 to 7.44 million in Q1 2022, according to a study by the NonFungible.com platform.

"We're facing a massive drop in NFT trading volume: a lot of people are disappointed with NFTs. If you don't know what you're investing in, you're going to lose money", warns COO Gauthier Zuppinger.

As a result, volumes plummeted as NFTs disappointed. Many individuals, who bet big without looking at the projects or carrying outdue diligence, lost their life savings. Nevertheless, Gauthier Zuppinger does not anticipate a "market crash in the NFT industry". According to him, the market should be worth $100 billion this year.