NFT markets a “game for pros” in 2023 as volume declines
The NFT market is experiencing a downturn in 2023, with daily trading volumes falling significantly compared to previous peaks, according to a recent NFT report from Galaxy.
Ethereum’s price performance has outperformed NFT projects, causing a breakdown of their long-standing positive correlation. Despite this, NFT activity is still higher than the 12-month low in November 2022, with daily trading volume decreasing each month in 2023.
NFT marketplaces
Within the NFT marketplace sector, Blur has seen its trading volume dominance reach an all-time high of 80%, mainly driven by airdrop farmers looking to take advantage of their Season 2 token airdrop. “The top 1% of Blur traders account for 64% of the platform’s volume,” compared to just 20% on OpenSea.
OpenSea, which caters more to the retail collector market, has moved to attract professional traders with a professional trading platform and reduced fees, resulting in a subsequent increase in trading volume to 23.7% (+52%), while Blurs fell by 15%.
It’s a bold move for OpenSea to compete for professional traders’ attention as whale activity on Blur has skewed its user base towards professionals, as the top 1% of users account for roughly 64% of the platform’s trading volume. Meanwhile, near-term NFT market sentiment is dwarfed by falling floor prices for prime blue chip projects as collectors de-risk their investments in response to the contracting market.
NFT royalties
The report suggests that “NFT royalties are becoming less relevant” as the market turns bearish, leading creators to seek new revenue strategies.
Royalty fee transactions have declined dramatically on both Blur and OpenSea, with creators likely needing new monetization strategies. As for the battle between the marketplaces, the report notes that OpenSea’s user base is considered more organic and potentially more sustainable in the long run. At the same time, short-term whales mainly drive Blur’s dominance.
Despite falling floor prices for popular NFT collections, blue chip projects have shown at least some resilience during the bear market. Projects like Bored Ape Yacht Club, Doodles, Mutant Ape Yacht Club, CloneX and Moonbirds are all down over 64% from all time. Moonbirds were the hardest hit, down 92% and 49% year-to-date.
In its assessment of the outlook for the NFT market, the report noted that the introduction of Bitcoin-based NFTs, Ordinals, is driving renewed interest in the space. Furthermore, signals to watch for NFT activity returning, ERC-721 vs. ERC-20 token transfers and OpenSea retail volume. It concluded that “until a major recoil, it’s a game for pros,”
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