New data reveals seller superiority in current NFT markets
The NFT sector has gained more popularity and worldwide acceptance. The concept emerged after the decentralized finance (DeFi) frenzy, creating a loud buzz with its value proposition.
Especially top venture capital firms, Paradigm and Andreessen Horowitz embraced NFT, increasing its recognition, use and investment. However, the number of holders that shorter tokens is currently increasing. NFTGo reports that the total number of sellers in April 2023 exceeded the number of buyers.
Sellers dominate the non-fungible token market in 2023
NFTGoan analytics platform, reveals that there were only 7,907 buyers compared to 8,641 sellers on April 26. Earlier, the market fell to its second lowest point in the past 12 months on April 19 with just 5,893 buyers.
It reflects the June 18, 2022 low of 5,343 buyers. These figures suggest a declining demand for NFTs which may reduce the value of NFTs for merchants.
Related reading: Bitcoin emerges as safe haven with correlation to gold at 2-year highs
The co-founder of Canary Labs, Ovie Faruqresponded to the buyer’s rejection in a tweet. He stated that day traders ranged from 20,000-60,000 in the past year. But in recent days there has been a decline. Faruq believes that the market is not functional at the moment.
SVB collapse reason behind reduced NFT trading volume
According to a data platform, DappRadarNFT trading volume was between $68 million and $71 million before Silvergate Bank (SVB) collapse. However, they crashed to $36 million after the March 12, 2023 collapse.
Also, daily NFT sales fell by 27.9% between March 9 and 11. According to this report, only 11,440 NFT traders were active on March 11. This represents the lowest figure recorded since November 2021.
DappRadar is to blame loosen of USD coin (USDC) to $0.88 as the event diverted traders’ attention from the market. Despite the decline, however, the market value of some high-value collections was not significantly affected. These gatherings include Bored Ape Yacht Club (BAYC) and CryptoPunks.
NFT Wash Trades increased
NFT wash trades surged in February across the top six NFT marketplaces, pushing total trade volume to $580 million. CoinGecko reports that February 2023 ushered in a 126% increase from January’s trading volume of $250 million.
Wash trade is an illegal activity under US law. A trader or robot buys and sells the same crypto asset multiple times to offer misleading information to the market. The aim is to artificially increase trading volume to lure retail traders leading to price growth.
Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks and LooksRare, the top six marketplaces, saw an increase in wash trades. These marketplaces often offer users transaction rewards as incentives to increase trading volume.
A popular investor and financier for crypto startups Mark Cuban, stated in January that wash trading will cause the next crisis in the crypto market. He believes the eventual discovery and removal of wash trades from exchanges will affect the crypto industry.
Featured image from Pixabay and chart from Tradingview
