NFT sales are up 43%, but are we really in a bull run?

The bear market of 2022 left many in the NFT ecosystem bruised and battered. Sales plummeted, prominently numbers again, and consumer brands began to grimace at the thought of launching their own non-fungible offerings. But it seems the new year may have brought about a change.

As the new year rolled around, the NFT market begins to trend upwards. Global markets’ NFT sales volume is up 43 percent this month, according to data from Cryptoslam. With project floors on the way up, coin prices pumping and open issues about to peak, community sentiment has also been largely up. Of course, it’s not just positivity that moves the needle in Web3, but a statistical increase that drives the NFT space forward.

But before we get ahead of ourselves with optimistic thinking, there are a few things we need to consider before calling this a full-blown bull market. So let’s do some analysis of the markets to see what’s really going on and find out what projects – or other things – are driving this shift.

Are NFTs Back?

First we need to get one thing straight. For Web3 collectors, artists, and builders who have been regulars over the past few years, NFTs have never left in the first place. Why? Because NFTs are far more than money or markets. They are an innovative technology that can be used for a variety of purposes. So saying “NFTs are dead” is like saying “virtual reality is dead.” The markets may be down; however, the technology is alive and well – but I digress.

To those who have only dealt with Web3 or are on the outside looking in, NFT markets were mostly dead, and now they seem to be on the rise again. However, the situation is significantly different this time. Unlike the NFT boom of 2021, the market has matured and become less of a Wild West free-for-all.

To be honest, million dollar sales and trades happen far less often than before in the NFT area. But maybe this is for the best. As with the waning of mainstream coverage and attention – which was often only focused on the financial aspect of NFTs in the first place – the NFT community went back to basics. In 2022, creators and collectors alike were forced to rethink why they had become interested and involved in crypto art in the first place.

It’s clear that a lot has changed in Web3 over the course of the bear, and perhaps this latest surge is simply the market showing that change as a result. Because according to the Dune analytics dashboard, after bottoming out at around $253 million in total ETH NFT sales volume in November (the lowest month since June 2021), OpenSea has rebounded through January to reach over $350 million in sales volume (with almost a whole week left in the month).

So why is OpenSea reporting its ETH NFT sales volume increase for the first time since April 2022? Is it a direct result of the recent ETH price increase or is there something more behind this market boom? The answer may surprise you. Or maybe it doesn’t…because we can point directly to the forces at play in this latest NFT pump. And it all really starts with ETH.

Why are NFTs pumping?

Any NFT collector worth their salt will readily tell you that by and large, 1 ETH equals 1 ETH. That is, regardless of coin prices, cryptos and NFTs will always retain their value in some respect. It is a common belief in the NFT space that pricing should not be the focus of the decentralized creative industry created on the blockchain. And while ETH can make the weird, wide world of NFTs go round, as previously mentioned, Web3 is about more than stacking coins.

Yet the same collectors who spit values ​​will also tell you that when the price of ETH changes, NFT prices change as a result. There are yin and yang to the blockchain, and it often goes one of two ways.

In the first case, ETH prices fall. As a result, people start selling their NFTs in panic. This can lead to robust selling for a moment, but if ETH does not recover in time or declines further, selling is slow. See OpenSea monthly sales volume side by side with the price of ETH for reference. Although January 2022 was a record month for NFT sales (even with ETH prices halved compared to the previous month), things were different when the summer crash came.

In case number two, ETH is trending upwards, potentially leading to a robust selling round that breathes new life into the NFT space. This was part of the equation for the first bull run in 2021 and could happening now. But whether NFTs made ETH pump or vice versa the first time depends on who you ask. Regardless, it is important to note that these two scenarios depend on NFT trend history over the past few years. Much has changed and is changing in Web3, and whether these trends will be experienced or not is anyone’s guess.

So incoming bull run?

Beyond price action, one of the main drivers of this current NFT pump comes from a few specific projects. Those in the NFT space who are actively innovating, creating or otherwise helping the ecosystem sustain itself seem to be doing well. And one of the recent developments that is helping to propel them forward is not really an advent at all. Instead, the resurgence of Bored Apes and, of all things, Open Editions (OE) has the NFT space buzzing.

Open editions are a type of NFT release where, instead of minting and selling a limited set of identical NFTs, creators leave the bookend and allow collectors to create as many editions as they like – or limit it to a few per wallet and set a deadline for embossing. Jack Butcher, with his influential Checks project, is one of the most prominent leaders in the recent charge of open source prosperity.

From its inception, Butcher’s OE sold over 16,000 issues at eight dollars each as a satirization of social media verification. After OE closed, Butcher began tinkering with unique burning dynamics that would add value back to minters, and alongside his efforts, the NFT space did its thing, introducing dozens of derivatives to the market. Then the trend caught fire, and afterwards many creators decided to launch similar ventures of their own, using Manifold’s services to facilitate.

In January, the NFT space witnessed many creators, big and small, launch OE projects, and the numbers are still growing. Still, while ETH pumping and open issues have been two defining factors of this latest NFT uptick, one that has openly carried the entire ecosystem is the recently launched Bored Ape Sewer Pass.

As part of an ongoing new campaign centered around a new story arc called The trial of Jimmy the monkey, Sewer Pass NFTs were claimable in mid-January, driving over $20 million in secondary sales volume amid the launch of a competitive skill game called Dookey Dash. Considering the hold that Yuga and BAYC have had on the NFT ecosystem for two years now, it’s no surprise that NFTs happen to be pumping at the same time as yet another groundbreaking Bored Ape project.

Aside from BAYC, what can the NFT space expect from this convergence of an ETH pump, OE resurgence and Web3 brand initiatives? As Q1 2023 continues and tax season approaches, the NFT space may well become a stressful place to be again. In the short term, however, this trend of rising prices and increasing vibes looks set to continue.